October inflation was reported at 2.5% yoy
Mon, Nov 5 2012, 16:23 GMT
by
Marco Valli
|
UniCredit Group
- The flash estimate for eurozone October inflation was reported at 2.5% yoy, slightly above our forecast (we had, however, signaled upside risks to our call). The breakdown provided by Eurostat hints at a relatively large upside surprise on food inflation with respect to our forecast. Energy inflation is estimated to have shaved about 0.15pp off the headline inflation rate, with core inflation broadly stable – both were in line with our working assumptions.
- In Italy, CPI inflation slowed a touch more than we had predicted, to 2.6% yoy vs. 3.2%. This should be consistent with FOI inflation easing to 2.7% vs. 3.1%.
- Italy’s Stability Law has been amended. The planned 1pp hike in the reduced VAT rate has been scrapped, while the 1pp increase in the ordinary VAT rate has been confirmed. If this were to be the final version of the bill, the impact on Italy’s CPI in July 2013 would fall from +0.5/0.7pp previously estimated to +0.3/0.5pp.
- (*) Our FOI projections do not include the 1pp VAT hike in July 2013. We will formally change our forecasts (including the impact on eurozone inflation) after the Stability Law is approved by parliament.