Italy: positive inflation and trade balance data, which however indicate a compression of domestic consumption
Italy today receives news that is apparently good, but also hides the problems that the citizens of the Peninsula feel first-hand.
First of all let's look at inflation : the annual inflation rate in Italy slowed to 1.1% in August 2024 from 1.3% in the previous month, in line with preliminary estimates.
Transportation costs saw a decline (-0.2% vs. 1.5% in July), while deflation increased for communications (-6.8% vs. -5.2%) . On the other hand, prices recorded a slight acceleration for health (1.6% vs 1.5%), restaurants and hotels (4.4% vs 4.3%) and miscellaneous goods and services (2 .4% vs 2.3%).
Additionally, deflation eased for housing and utilities (-1.4% vs. -2.2%). Meanwhile, the inflation rate remained unchanged for food and non-alcoholic beverages (0.9%), non-alcoholic beverages and tobacco (2.4%), recreation and culture (2%) and education (1.8%).
Compared to the previous month, Italian consumer prices increased by 0.2%, also in line with the preliminary results.
source: tradingeconomics.com
Interestingly, core inflation is higher than general inflation, indicating a certain wage dynamic, deriving from the residual effect of previous inflation on wages.
source: tradingeconomics.com
Another positive data comes from the Italian trade balance : the Peninsula recorded a trade surplus of 6.743 billion euros in July 2024, the largest in the last three years, up compared to the surplus of 6.108 billion euros in the corresponding period of the previous year and significantly higher than the market consensus of 4.5 billion euros.
Let us remember that Germany, for example, had seen a fall in its trade balance in July.
Exports increased by 6.8% to 57.176 billion euros, with notable increases in sales of pharmaceutical items (21.4%), food and beverage products (15.7%) and chemical products (15.3%).
In turn, imports increased by 6.3% to 50.433 billion euros, as the decline in turnover from purchases of clothing (-7.2%) and natural gas (-6.5%) slightly offset increases in pharmaceutical items (24.6%), food and beverage products (16.2%) and chemical products (15.9%).
Here is the relevant graph:
source: tradingeconomics.com
The inflation and balance of payments data are positive, but they also indicate a situation in which the internal economy is being repressed, especially from the point of view of consumption. If the Italian industry, which is contracting slightly anyway, exports, it is because there is no national market, and this slows down its expansion. even the depression of inflation compared to the European average indicates a country that is forced to save.
The imposed austerity is not good for incomes, the country's real weak point, and for consumption. At least the industry remains internationally competitive, but Italians enjoy it in a very limited way.
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The article Italy: positive inflation and trade balance data, which however indicate a compression of domestic consumption comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/italia-dati-di-inflazione-e-bilancia-commerciale-positivi-che-pero-indicano-una-compressione-dei-consumi-interni/ on Mon, 16 Sep 2024 11:00:16 +0000.