Italy's headline inflation report, the HICP, showed that prices fell by 1.1% in March. The core measure for the HICP showed prices falling 0.3% in March. These changes came after a headline increase of 0.5% and a core increase of 1.2% in February.
The sequential percent changes in the HICP show that Italian headline inflation is moving lower. Prices are up 8% over 12 months, up at a 6% annual rate over 6 months and falling at a 4.6% annual rate over 3 months. In contrast, core inflation shows some but much less inflation progress. The core deceleration is much more moderate as prices are up by 6.8% over 12 months, they soften to gain 6.5% at an annual rate over 6 months and then slow to a 6.2% annual rate over at 3 months. For the most part, core inflation has a very, very, small deceleration built into it.
Domestic vs. HICP inflation Italy also reports out a domestic CPI; the domestic CPI for Italy fell by 0.5% in March, but the core CPI did not follow suit and was up by 0.4%. Italy's headline CPI report shows inflation falling sequentially parroting the HICP result. Headline inflation rises by 7.5% over 12 months, rises at a 6.7% annual rate over 6 months and then it falls at a 2.3% annual rate over 3 months. Core inflation for the domestic measure shows more of a decline than it does in the HICP measure. Italy's domestic core inflation is up by 6.3% over 12 months, up at a 6% annual rate over 6 months, and up at a 5.5% annual rate over 3 months. The difference between the 12-month and the 3-month inflation rate is just a little bit less than a percentage point at minus 0.8% comparing annual rates. It’s a modest pace of deceleration.
Inflation diffusion is not linear Diffusion calculations (performed on domestic CPI data) show that Italian inflation over 12 months is broadly higher than it was 12-months ago with inflation accelerating in 83.3% of the categories. However, over six months inflation accelerates in only 41.7% of the categories compared to their pace over 12 months. Over 3 months inflation accelerates in 62.5% of the categories compared to their inflation rate over 6 months. Therefore, while the inflation rates have stepped down from 12-months, to 6-months, to 3-months, diffusion calculations show that these trends are not uniform across categories and that over 3 months, despite the sharp decline in inflation compared to earlier metrics, there are a number of categories where inflation is still rising when compared to its pace of 6-months ago.
Global