Italian HICP inflation in July ticked up from 0.2% yoy in June to 0.3% yoy in July. The energy component improved from -5.8% yoy in June to -5.4% yoy in July led by higher electricity prices (-3.3% yoy to -1.0% yoy) while the liquid fuel prices weakened further from -8.0% yoy in June to - 9.5% yoy in July.
Food component proved to the biggest drag softening from 1.5% yoy to 1.1% yoy, cutting 8bp from the headline. The core component rose from 0.7% yoy to 1.0% yoy on the back of higher prices paid for services (0.5% yoy to 0.7% yoy), adding 9bp to the headline. Non-energy industrial goods prices fell from 0.9% yoy to 0.8% yoy.
"Italian HICP inflation is expected to remain unchanged at 0.3% yoy in August. Similar to the case in other Euro area economies Brent and gasoline prices continue to slide, we expect the stable food prices alongside the core metric to underpin the headline inflation. Moreover, Italian HICP inflation is likely to average 0.4% in 2015 and 1.4% yoy in 2016. The core component should average 0.8% in 2015 and 1.2% in 2016", states Societe Generale.
