--Italy's May EU harmonized CPI up 0.3% on mo, up 2.9% on yr
--Italy's May final national CPI confirms preliminary data
--Italy's May national CPI up 0.3% on month, up 3.0% on year
Rome, June 15 (BridgeNews) - Italian EU harmonized consumer prices rose 0.3% in May from April and advanced 2.9% on the year, national statistics institute ISTAT said Friday. Italy's national index, including tobacco, increased 0.3% on the month and rose 3.0% on the year, in line with preliminary estimates released by ISTAT on May 29.
This represents a slight calming of inflation from April when EU harmonized consumer prices moved ahead 0.4% on the month and rose 3.0% on the year while the national index, including tobacco, increased 0.4% on the month and rose 3.1% on the year, both record highs.
"Since the beginning of the year inflation has accelerated largely on the back of a rise in international oil prices and the weakness of the euro," said an ISTAT economist. He added the foot-and-mouth and mad cow crises, continued to add to food price inflation. As anticipated by preliminary data, upward inflationary pressure from food and transport, which includes a fuel component, was offset largely by reductions in electricity, gas and communications tariffs.
Transport prices rose 1.0% on the month on an EU harmonized basis, while food was up by 0.6%. Electricity and water prices fell 0.7%, while continued competition in the communications sector and a reduction in cellular phone tariffs brought prices down on an EU harmonized basis by 0.2%. On a yearly basis food inflation hit 4.1% and transport prices climbed 2.9%. This month's figures may represent a marginal calming of Italian inflation, but it remains well above the European Central Bank's 2% limit, which Italy has consistently exceeded since December 1999. What's more, as elsewhere in the 12-nation euro zone there are signs that volatile food and oil components are feeding through to core inflation, which rose to 2.8% in April from 2.2% in January, according to Eurostat data.
The acceleration in Italian inflation, starting from the second half of last year to peak at 3.1% in April forced Italy recently revised upward its annual average inflation target for 2001 to 2.3% from 1.7%. Analysts continue to be disappointed by the failure of oil and food price pressures to tail off and as a result have raised their 2001 forecasts, although they still see inflation coming down in the second half of the year. Many economists believe the new official objective is still unrealistic and forecast inflation ranging 2.5-2.8%.
The worrying Italian picture is reflected across Europe. Germany, the euro zone's largest economy, registered in May the fastest annual acceleration in prices since December 1993. The European Central Bank said Thursday it saw inflation hitting an annual average 2.3-2.7% in 2001, the top end of the range in its previous December forecast of 1.8-2.8%. For the second month in the row, euro zone inflation climbed again in April to an annual rate of 2.9% from 2.6% in March and a further rise is expected in May.