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Italy’s Inflation Rate Remained Flat in December

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Jan. 12 2016, Updated 10:06 a.m. ET

Italy’s December inflation rate is expected to be 0.1%

According to the National Institute of Statistics (Istat), Italy’s December inflation rate is expected to remain unchanged at 0.1% on a year-over-year (or YoY) basis. On a month-over-month basis, it is expected to show no growth, as compared to a decline of 0.4% in November 2015.

As a result, the iShares MSCI Italy Capped ETF (EWI) and the iShares MSCI Eurozone ETF (EZU) fell 0.30% and 0.87%, respectively, in yesterday’s trade. EWI and the EZU have fallen 5.7% and 5.9%, respectively, over the last month.

Among Italian ADRs (American depository receipts), Eni (E), Luxottica Group (LUX), and STMicroelectronics (STM) have fallen 5.7%, 8.6%, and 9.1%, respectively, over the past month, as of yesterday.

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Italy’s HICP is expected to be 0.1% in December 2015

Italy’s HICP (harmonized index of consumer prices), which facilitates better comparison between Eurozone nations, is expected to have risen 0.1% in December 2015 on a YoY basis, as compared to a 0.2% rise in the previous month. On a month-over-month basis, it is expected to have fallen 0.1% in December, as against a decline of 0.4% in November 2015.

Recreational, cultural, and personal care prices are expected to have risen by 0.9% in December 2015, as compared to a rise of 0.6% in November 2015. Also, the prices of nonregulated energy products are expected to have fallen by 8.8% in December 2015, as compared to a fall of 11.2% in the previous month. Both components are expected to add to inflationary pressure in the Italian economy.

The prices of services related to transportation are expected to have fallen by 1.7% in December, as compared to a rise of 0.6% in November. The slow growth of prices of unprocessed food to 2.2% in December, as compared to 3.2% in the previous month, is also weighing on the inflation rate.

Italy’s inflation rate staying lower is highly disappointing in light of the quantitative easing measures undertaken by the ECB (European Central Bank) to infuse growth into the economy.

However, with manufacturing activity picking up in the economy, consumer spending may increase. Also, with the extended stimulus, Italy may recover to come out of the low inflation trajectory.

So far in this series, we’ve looked at data from developed economies. Now let’s turn to emerging economies. Brazil has released its trade data, which we’ll cover in the next article.

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