Italy’s February final HICP inflation to remain unchanged from flash estimate

Italy’s final HICP inflation for February is expected to have reached -0.2% y/y, unchanged from the flash estimate. Istat release had stated that all the major components have posted lower prices on a year-on-year basis. Energy prices dropped further to -5.5% y/y in February from -4.1% y/y in January. Also, food prices fell to -0.3% y/y from 0.8% y/y, mainly due to considerable decline in prices of processed food and unprocessed food.

The component fell to 0.5% y/y in February from 0.9% y/y in January. Meanwhile, the non-energy industrial goods fell to 0.9% y/y in February to 1.2% y/y in January, while services inflation decelerated to 0.4% y/y in February, as compared with 0.8% y/y in January.

On a monthly basis, transport and communication prices fell 0.9% m/m and 1% m/m, respectively, whereas on a year-on-year basis, prices dropped 2.7% y/y and 0.5% y/y. Meanwhile, clothing and footwear prices fell 3.6% m/m and 0.7% y/y because of winter sales.

“We expect Italian HICP inflation to average 0.8% in 2016 and 1.7% yoy in 2017. The core component should average 1.0% in 2016 and 1.3% in 2017”, says Societe Generale.