Italy’s Industrial Prices Dip Slightly in July 2023

Italy’s industrial prices experienced a marginal monthly decrease of 0.1% in July 2023, while showing a significant 10.2% decline compared to the previous year, marking a notable acceleration from June’s 5.5% annual decline.

Domestically, prices remained stable compared to June but contracted by 13.8% year-on-year, showing an increase in deflationary pressures, compared to the 8.2% decrease in the previous month. Excluding the energy sector, prices fell by 0.6% on a monthly basis, and the annual growth rate slowed down further to 1.3%, down from June’s 2.2%.

Internationally, prices decreased by 0.5% on a monthly basis (0.6% in the euro area, 0.5% in the non-euro area) and saw a modest 0.2% increase on an annual basis (a decrease of 0.4% in the euro area and an increase of 0.8% in the non-euro area).

For the May-July 2023 quarter, industrial prices dropped by 6.2% compared to the previous quarter, with a substantial decline in the domestic market (-8.3%) and a minor decline in the foreign market (-0.3%).

In July 2023, within the manufacturing sector, the most significant annual increases were observed in the textile, clothing, leather, and accessories industries (up by 6.8%) and the food, beverage, and tobacco industries (up by 5.0%) in the domestic market. On the international market, the transport equipment sector saw an increase of 8.1% in non-euro areas.

Conversely, price decreases were noted across all markets for coke and refined petroleum products (down by 14.3% domestically, 1.9% in the euro area, 12.9% in the non-euro area), metallurgy and metal products manufacturing (down by 6.2% domestically, 12.6% in the euro area, 10.7% in the non-euro area), chemicals (down by 6.4% domestically, 4.7% in the euro area, 9.2% in the non-euro area), and wood, paper, and printing industries (down by 1.3% domestically, 7.5% in the euro area, 1.2% in the non-euro area). The most significant annual price declines were in the domestic market for mining activities (-60.5%) and the supply of electricity and gas (-39.4%).

In July 2023, construction industry prices for “Residential and Non-Residential Buildings” increased by 0.8% on a monthly basis and by 1.4% on an annual basis. Prices for “Roads and Railways” rose by 0.5% on a monthly basis and by 0.2% on an annual basis.

For the second quarter of 2023, service production prices increased by 0.4% compared to the previous quarter and by 2.8% year-on-year. The highest annual increases were in car rental services (+8.3%) and warehousing and storage services (+6.5%). The only annual declines were in maritime and coastal transport services (-19.5%) and telecommunication services (-6.6%).

The analysis suggests that July’s slight dip in industrial prices can be attributed mainly to decreases in intermediate goods prices across all markets. On an annual basis, the drop is largely due to intensified negative dynamics in energy prices, followed by intermediate goods on the domestic market. On this market, the annual growth rate of consumer goods prices continues to slow down (+6.4%, compared to +7.3% in June).

In the construction sector, price increases are driven by rising labor and overhead costs. On an annual basis, prices continue to accelerate, particularly for buildings, while roads see modest increases after two months of declines.

In the service sector, the second quarter of 2023 reflects mixed dynamics, with rises in other information and fixed telecommunication service activities but declines in air freight transport services and maritime transport services.