Istat: inflation falls to 2.8% in July

According to preliminary estimates, in July the national index of consumer price index for the general population (Nic), excluding tobacco, rose by +0.2% month-on-month and +2.8% year-on-year (down from +3.0% in the previous month). This was reported by Istat.

The slight slowdown in inflation reflects price trends for unprocessed food (from +4.4% to +3.8%), unregulated energy prices (from +13.3% to +10.6%) and miscellaneous services (from +2.5% to +1.8%); by contrast, prices of processed food (from -0.2% to +0.2%), regulated energy (from +9.2% to +14.9%) and transport-related services (from +1.1% to +1.6%). In July, core inflation – excluding energy and fresh food – remained stable at +1.6 per cent, whilst inflation excluding energy alone slowed from +1.9 per cent to +1.8 per cent. Prices of goods slowed (from +3.3% to +3.1%), whilst the rate of change for services remained stable (+2.6%). The differential between the services and goods sectors narrowed from -0.7 to -0.5 percentage points. The year-on-year rate of change in prices for food, household and personal care products remained at +1.3 per cent, whilst that for frequently purchased goods fell (from +3.9 per cent to +3.6 per cent). The month-on-month change in the overall index reflects the rise in prices of regulated energy products (+6.6%), transport-related services (+1.4%), processed food (+0.7%) and recreational, cultural and personal care services (+0.5%); these effects are only partially offset by the decrease in unprocessed food (-1.1 per cent) and unregulated energy products (-0.3 per cent). The projected inflation rate for 2026 stands at +2.7% for the overall index and +1.8% for the core component. According to preliminary estimates, the Harmonised Index of Consumer Prices (HICP) recorded a month-on-month change of -1 per cent, due to the summer sales which the NIC does not take into account, and a year-on-year change of +2.9 per cent (down from +3 per cent in the previous month).

In July, both consumer confidence (from 92.4 to 94.2) and the composite business confidence indicator (from 95.3 to 95.6) are estimated to have risen. This was announced by Istat, which explained that, as far as consumers are concerned, all the variables included in the calculation “show a positive trend, with the exception of assessments of the household economic situation – where the balance has fallen marginally – and opinions on whether it is advisable to save at the present time”. As regards businesses, confidence is rising in manufacturing and services, whilst it is falling in construction.

According to Istat, there has been a marked improvement among consumers in both the economic climate and the outlook for the future (from 87.6 to 90.9 and from 87.4 to 89.8, respectively); personal and current sentiment have shown a more modest improvement (rising from 94.2 to 95.4 and from 96.2 to 97.4, respectively). As regards businesses, in the manufacturing sector the index rose from 88.6 to 89.6, in market services it increased from 97.2 to 98.1, and in the retail trade it rose from 105.6 to 106.4. In construction, however, the index fell from 101.6 to 96.8. As for the components of the confidence indices, in manufacturing, assessments of orders and expectations regarding production levels are improving, against a backdrop of rising stock levels. In construction, both variables have deteriorated. Turning to the market services sector, there has been a positive trend in assessments of both order levels and business performance; expectations regarding orders, however, are down. In the retail sector, expectations regarding sales are positive, a trend seen in both large-scale and traditional retail, whilst assessments of the current situation are deteriorating; the net balance of assessments of stock levels is rising.