Italy’s domestic demand turning up
The Italian consumer price index rose by 0.1% compared with the previous month and by 0.4% against March 2013, the Italian National Institute of Statistics (Istat) has revealed.
The slowdown of inflation was mainly due to the decreases of prices of non-regulated energy products and of unprocessed food and to the reduction of inflationary trends for most of the others aggregates of goods and services.
Excluding unprocessed food and energy, core inflation was 0.9% (0.1 lower than in February 2014); excluding only energy, the inflation was 0.8%, down from 1.0% in February 2014.
The increase on monthly basis of all items index was mainly due to the increase ‒ on which also seasonal factors had an impact ‒ of prices of Services related to transport (+0.6%) and Services related to recreation, including repairs and personal care (+0.3%); the monthly rise of prices of Services related to housing (+0.3%) had an upward impact, too.
Commenting on the data, Bank of America Merrill Lynch noted that the Italian economy was cyclically stronger, but domestic demand was on the mend.
“The Istat business surveys for March confirm that the recovery is gathering
steam. It is now broadening across sectors and regions, and expanding to
domestic demand,” BofA Merrill Lynch’s report said.
“The business confidence index rose to 89.5 in March, the highest reading since August 2011, reflecting improving services sector sentiment, high but mildly lower manufacturing confidence, and still weakening construction and retail trade sentiment,” the report added.
“The breakdown from the manufacturing sector shows rising domestic orders – the highest reading since April 2011 – and stable export orders for the month. Companies also report relatively low levels of inventories, which may signal upside risks to GDP growth in the first part of the year as they are forced to re-stock once orders pick up.
“These releases add weight to our recently upgraded GDP forecasts of 0.5% in 2014 and 1.1% in 2015,” the report concluded.
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