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Italy has emerged from its first year of outright deflation in nearly 70 years by posting its highest inflation rate since 2013 in January.

A final reading for harmonised consumer price inflation came in a 1 per cent last month compared to the same period in 2016 in Europe’s third largest economy. Price growth accelerated from the 0.5 per cent rise posted in December.

Inflation has been on the march across Europe in the last three months as last year’s energy price slump fades out of the annual inflation basket.

Still, price pressures in the Italian economy remain moderate compared to a 1.8 per cent average inflation in the eurozone last month with German prices rising by 1.9 per cent at the start of the year – the highest since 2012.

Rising inflation is good news for Italy’s mounting debt burden, which is expected to climb to over 133 per cent of GDP this year. Inflation chips away at rising government liabilities.

Italy posted its first year of outright deflation since 1959 in 2016, but managed to notch up its best rate of GDP growth since 2010 last year at 0.9 per cent.

Copyright The Financial Times Limited 2019. All rights reserved.

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