Italy’s August 2023 Consumer Price Index: Inflation Rate Slows

The latest provisional data on consumer prices for August 2023 has been released by the National Institute of Statistics (ISTAT). These figures indicate a notable change in Italy’s inflation rate.

Here are the key highlights:

  1. Monthly and Annual Inflation: In August 2023, the National Consumer Price Index (NCPI), excluding tobacco, increased by 0.4% compared to the previous month. On an annual basis, inflation stands at 5.5%, down from the 5.9% reported the previous month. This marks a deceleration in the inflation rate.
  2. Factors Influencing Inflation: The deceleration in inflation can be attributed primarily to a slowdown in the year-on-year price increases in the following categories:
    • Unregulated Energy Goods: The rate decreased from +7.0% to +5.7%.
    • Recreational, Cultural, and Personal Care Services: Decreased from +6.6% to +5.9%.
    • Unprocessed Food: Decreased from +10.4% to +9.2%.
    • Transportation Services: Decreased from +2.4% to +1.2%.
    • Durable Goods: Decreased from +5.4% to +4.6%.
    Additionally, there was a minor reduction in the inflation rate of Processed Food, from +10.5% to +10.1%. However, these effects were partially offset by a moderate acceleration in Housing-related Services (from +3.6% to +4.0%) and a reduction in the decline of Regulated Energy Goods (from -30.3% to -29.0%).
  3. Core Inflation: When excluding energy and fresh food prices, the core inflation rate also decreased from +5.2% to +4.8%. Similarly, core inflation, excluding only energy prices, fell from +5.5% (as recorded in July) to +5.1%.
  4. Goods vs. Services: The annual growth in prices of goods slowed from +7.0% to +6.4%, while the growth in service prices decreased from +4.1% to +3.6%. This reduction has led to a narrowing of the inflation gap between the services and goods sectors to -2.8 percentage points, compared to -2.9 in July.
  5. Food and Household Items: The prices of food and household care products have continued to slow down on an annual basis (from +10.2% to +9.6%). However, products with high purchase frequency experienced an acceleration (from +5.5% to +7.0%).
  6. Contributing Factors: The increase in the general index was primarily driven by rising prices in regulated (+2.0%) and unregulated (+1.7%) energy, transportation services (+1.2%), processed food (+0.8%), durable goods, and housing-related services (both +0.4%). These effects were partially offset by the attenuation of prices for unprocessed food (-0.5%).

As of now, the cumulative inflation for 2023 stands at +5.7% for the general index and +5.2% for the core index.

Moreover, the Harmonized Index of Consumer Prices (HICP) increased by 0.2% on a monthly basis and by 5.5% annually, a deceleration from the +6.3% observed in July. This divergence in the HICP from the NCPI is attributed to seasonal sales dynamics, particularly in the Clothing and Footwear category, which recorded a larger monthly decline (-3.1%) compared to August 2022 (-0.7%), resulting in a slowdown from +5.4% to +2.8% for this spending division.