Deflation warning: sharp fall in prices in Italy and the eurozone. According to Istat in February -0.2% – Il Sole 24 Ore

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This article was published on February 29, 2016 at 11:18 hours.
the last change is the 29 February 2016 at 14:41.

You deflation alarm in Italy and the eurozone as a result of the sudden drop in oil prices. If they needed a figure to induce the European Central Bank to take action at the next meeting in March, it arrived today. Let’s start from Italy: inflation, announced this morning the Mayor, decreased in February by 0.2% MoM and 0.3% on an annual basis (+ 0.3% in January). The strong downward trend in consumer prices, explains the Institute, is due to a cyclical dynamic features of widespread price declines in almost all types of products, which compares with the positive of February 2015 when all types of products marked a price recovery of the month. The inflation for 2016 amounted to -0.6 percent.

Along the same lines as the European: the Eurozone inflation back in negative territory in February, falling to -0.2% compared to 0.3% in January. It is the flash estimate of Eurostat. This is the strongest descent from a year now. The last minus Eurozone was seen to September 2015 (-0.1%). Looking at the main components, the services have the highest rate (1%, while in January they were 1.2%), followed by food, alcohol and tobacco (0.7% in January were at 1%), industrial products non-energy (0.3%, compared to 0.7% in January) and energy (down 8%, compared to -5.4% in January). Without considering food and energy, inflation in the euro area (core CPI) rose by 0.7% from + 1% in January.

“If we look at Europe at this moment – said yesterday the governor of the French Central Bank Francois Villeroy de Galhau – the danger is clearly deflation, not inflation. If energy prices low have long-term effects, we must take action. It seems this is the case, but we will see in March. ” The ECB meets next on March 10 to launch new anti-deflation measures announced by Draghi after the last meeting. Today’s data may only reinforce the pressure not because Frankfurt act.

The February data are negative in almost all European countries, from -0.2% in Germany to 0.1% in France up to 0.9% in Spain. “Deflation would be a disaster for the euro area – notes Holger Sandte, economist at Nordea Bank – as it would further increase the debt burden. The problem is that indipendentementeda what the ECB will decide on March 10, inflation will remain around zero for some months before rising. “

Returning to Italy, the so-called price shopping cart food prices, for the care of the house and of the person decrease of 0.1% compared to January and by 0.4% year on year (in January was + 0.3%). This is the first downward trend since December 2014 and the broader from July of the same year. In particular for food products (including alcoholic beverages) prices decreased by 0.1% on a monthly basis and record on a yearly basis, a reversal of the trend (-0.3%, from + 0.4% in January ).

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