FLORENCE, ITALY – Deflation alarm as prices drop in many big cities in Tuscany and Italy as well. Annual inflation just 0.1%, lowest since August 2009.
Figures released by national statistics agency Istat showed that the Italian economy is perilously close to price deflation. Istat said Italy’s annual inflation rate in July was just 0.1%, confirming its preliminary estimate, and down from 0.3% in June, putting it at the lowest level since August 2009.
Deflation was also registered in July in Turin (-0.4%), Florence (-0.3%), Bari (-0.3%), Trieste (-0.1%), Potenza (-0.1%), Livorno (-0.7%), Verona (-0.5%), Ravenna (-0.1%) and Reggio Emilia (-0.1%).
Deflation is seen as a problem by many economists as it increases the real value of debt and may aggravate the recession. Istat announced last week that Italy has slipped into its third recession since the start of the global economic crisis in 2008, with a second consecutive quarter of negative growth in the April-June period. GDP dropped 0.2% in the second quarter after shrinking by 0.1% in the first three months of 2014.
The series of recessions has caused Italian unemployment to rise to over 12%, with the jobless rate above 40% for under-25s. Deflationary trends could also be seen in Istat’s index for its trolley of the everyday goods that are most frequently bought by consumers. This index, which monitors the prices of items such as foods and household goods, dropped by 0.6% in July with respect to the same month in 2013 – the biggest since August 1997.
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