Inflation in Italy: growing at 1.3%, but lower than the ECB’s targets.
Inflation in Italy is rising, but… it remains low. However, let's move on to the data provided by Istat and their analysis:
Italy's annual inflation rate rose to 1.3% in March 2024 from 0.8% the previous month, as high base effects for bills continued to fade, according to preliminary estimates.
However, the result fell short of market expectations of an inflation rate of 1.4% over the period, in line with softer-than-expected inflation in other large European economies.
Deflation eased for unregulated energy (-10.7% compared to -10.3% in February) and for regulated energy (-13.8% compared to -18.4%), while Consumer prices accelerated for transport services (4.4% compared to 3.8%). On the other hand, inflation slowed for unprocessed foods (2.6% vs 4.4%) and tobacco (1.9% vs 2.6%). Here is the relevant graph
The nation's core inflation rate, which excludes energy and unprocessed foods, rose to 2.4% from 2.3% in February. Compared to the previous month, Italian consumer prices increased by 0.1%.
Therefore, Italian inflation rose slightly in March, because in any case the decline in energy prices cannot continue forever. However, it remains below the ECB's 2% inflation objectives. So if the ECB were to decide considering only the Italian economy, it would say "Mission accomplished" and start lowering rates, before the effects of real interest rates too loud to make themselves heard.
Because now for Italy we have a positive real rate, set by the ECB, of 2.2%, which is a lot, especially after all these years of zero or negative rates. However, the ECB does not decide only on the basis of Italy, and this is a problem, the usual Procrustean bed problem, whereby the Central Bank's rates are too high for some countries, such as Italy, and too low for others.
The very problem that has no solution and which is one of the worst defects of the ECB.
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The article Inflation in Italy: growing at 1.3%, but lower than the ECB's targets. comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/inflazione-in-italia-in-crescita-all13-ma-inferiore-agli-obiettivi-della-bce/ on Fri, 29 Mar 2024 21:51:54 +0000.