Final estimate for eurozone September inflation should come in at 2.6% yoy
Fri, Oct 12 2012, 15:15 GMT
by
Marco Valli
|
UniCredit Group
- Next week, Eurostat will publish the final estimate for eurozone September inflation. National HICP data released so far (particularly the downside surprise in France) suggest a 0.1pp downward revision to the flash estimate, reported at 2.7%. Accordingly, headline inflation should come in at 2.6% yoy, consistent with a 0.7% mom increase.
- In Italy, this week the government announced the decision to hike the VAT rate by 1pp in July 2013. The implementation of the measure will depend on parliamentary approval, which we deem as likely. We have not yet included the VAT hike in our forecasts: we will do so once the parliament gives the green light. The most recent episode of VAT increase (+1pp in mid- September 2011 on about half of the CPI basket) showed a relatively high pass-through. This time, about 75% of the CPI basket will be affected, and we estimate that the VAT hike could boost inflation by 0.5/0.7pp.