Italy's and Spain’s final HICP inflation in May likely to remain same as flash estimates

Italy’s final HICP inflation for the month of May is expected to have remained unchanged from the flash estimate of -0.3 percent y/y, said Societe Generale in a research report. The expected print is a slight improvement from April’s data. This shows a continued rebound in food prices led by higher prices of unprocessed and processed food products. Other components have continued to be largely stable.

Energy prices were stable at -8.2 percent y/y. Meanwhile, core inflation has also continued to be stable at 0.6 percent y/y as prices paid for services continued to stay at 0.5 percent y/y and non-energy industrial goods prices fell slightly to 0.7 percent y/y. Inflation in Italy, like other euro area countries should continue to recover, accelerating more than 1 percent y/y in Q4 2016 due to base effects from energy prices, according to Societe Generale.

Meanwhile, final HICP inflation for Spanish is also expected to have remained unchanged from the flash reading of -1.1 percent y/y in May. According to the INE press release, electricity prices had gained in May, whereas package holiday prices had declined slightly. Spain’s HICP inflation in the future is likely to continue rebounding, mainly because of base effects. However, inflation is expected to remain in negative territory until July.