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Inflation and industrial production data still treading between growth and decline

by Laura Cavestri

Italian inflation and industrial production data point to ongoing uncertainty within the euro zone’s third largest economy as it continues to tread a fine line between inflation and deflation, growth and decline.


Consumer prices rose 0.1% on an annual basis in November and fell 0.1% compared to the previous month, preliminary figures from national statistics office ISTAT showed yesterday. The cold shower of the threat of “deflation” that had raised fears in October of a return to price declines seems to have been followed by an inversion in the trend.

“The slight recovery in inflation is due above all to the trend in prices of services, starting with recreational and cultural services and personal care (+0.8%) and services related to transport (+1%). Energy and food also play a role,” ISTAT said.

A basket of goods indicator ISTAT uses to measure inflation rose 0.4% compared to October. Prices of the goods bought most frequently registered the biggest gains. Those included prices of fresh vegetables (+4.9%) and of fresh fruit (+2.8%). The rise in the basket of goods indicator was also due to energy prices. On an annual basis, the statistics office registered an increase of 0.6% (compared to +0.2% in October).

That's an unmistakable rise in November. ISTAT said that both core inflation (net of fresh food and energy) and inflation net of energy both accelerated, each up 0.4% compared to +0.2% in October. In particular, prices of non-regulated energy goods such as fuel contributed to the return to positive territory, with an increase of 0.3% (after -0.9% in October)

According to calculations by the National Consumers Union, the annual increase in November of 0.6% in goods that are frequently purchased “means that a couple with two children will be paying 92 euros extra per year, in terms of an increase in the cost of living, ” its president Massimilano Donà said.

Csc Confindustria: industrial production falling

According to the study unit of employers lobby Confindustria, industrial production fell 0.4% in November compared to the previous month (when it was estimated to have risen 0.7% compared to September). Work-day adjusted output however rose 1.7% compared to the same month of 2015. These indicators are coherent with the slight rise in production expected in the final quarter of 2016.

In November, manufacturing business confidence started to worsen after two months of recovery: the general index fell 0.9 points to 102 after rising a cumulative 1.7 points in September and October. Overall, the country is going forward, only to head backwards.