Andrew Low
ROME, 1959 was a year full of events. Fidel Castro became prime minister of Cuba. China put the word end to the independence of Tibet. In the shops they had the first Barbie. And in Italy the prices of consumer goods decreased compared to the previous year. From that moment on, for the next 56 years, they have not done that growing up. For a long time even to two digits. The year just concluded, instead, reported back the clock eleven, and passes a half decades: for the first time since 1959, has informed yesterday to the Istat, consumer prices in 2016 are decreased. Only a 0,1% from 2015, but enough to bring the Country into the dreaded deflation. Feared, especially by those who, like Italy, has a huge public debt. Inflation year to year helps to deflate the tire by moving up the Product (nominal Gdp) of the Country. Without inflation, the burden becomes increasingly heavy. Here, in short, the news released yesterday by Istat is not the best. But there is another statistic that bodes well for the future. Consumer prices in December rebounded 0.4%, bringing inflation over the previous year to +0.5%. It was not enough to close the entire 2016 with a plus sign, but the figure was still surprised at the positive analysts were not expecting a bounce similar. To push the prices upward was the increase in the price of oil after the agreement of November at the Opec has decided to cut production. The cost of transport increased by 1.4%, due to the high price of gasoline. In December also increased the expenses for culture and leisure, but it is increases in seasonal mainly related to the sale of vacation packages for the mountain. The only goods that have been reduced, prices are catering, accommodation services, and the sale of alcoholic beverages and tobacco. Are increased, however, prices of food, especially because of the products and fresh vegetables. Core inflation, that so-called “core”, that is, purified from the goods subject to a higher volat ility in prices, such as energy products, has remained in positive territory (+0.5%), but less than last year (+0,7%).
NORMALIZATION
The data, in short, are in chiaroscuro. “The ascent in progress,” explains Paolo Mameli, senior economist of Intesa San Paolo, “is expected to continue in the coming months, and this is a sign of normalization. However,” he explains, “it will be very slow”. For 2017, the expectation of the analyst is of a general price increase of 1%. After three years of substantial stagnation, it is still a good signal. But with some caveats. To push the inflation, as I said, it is mainly the rise of oil prices. Incomes are still stagnant. In the absence of an increase in employment or wage deflation, however, defends the purchasing power of households. The inflation of the herod. The other unknown concerns the Ecb and its purchase of public securities, including those in italy, which is holding down the cost of the interest on the debt. Frankfurt am main, to make its own decisions, not look to the Italian, but to the european one. In D ecember, the Eurozone has registered a sharp acceleration of inflation, climbed 1.1%. The price index German has even jumped 1.7%, the largest increase from when they published the harmonised data. This he did immediately sharpen claws for the hawks, who have begun to ask the Dragons to review the program of purchase of government securities. A decision to this effect may put you in difficulty in Italy. Quantitative easing keeps interest in Rome, which pays on the public debt, which fell from almost 90 billion in 2012 to 66 billion this year. For the next year, the Treasury estimates a further reduction to 63.5 billion. Difficult for Dragons to review the decision just taken to extend to the whole of the 2017, the purchase of the securities.
Also because he has always explained that inflation should remain stable close to 2%. A blaze, in short, is not enough. But it will be difficult to decide on new measures.
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