In January 2015, inflation in Italy was negative and equal to -0,5%. The drop in prices affects all major European economies. In Germany the decline was 0,5%, in France 0,4%, in Spain 1,5%. The reduction in consumer prices is not a new phenomenon.
In 2009, in Italy, a minimum value of -0,1% was reached, in Germany -0,7%, in France -0,8%, in Spain -1,3%. However, the current situation presents some differences compared to 2009. In 2009, negative inflation was mainly the result of falling energy prices.
Today, in Italy, the drop in prices affects several items of expenditure. The trend in inflation also appears to be linked to the weakness of demand and changes in household consumption choices. Today, people seem to pay increasing attention to optimizing the resources they already have, postponing purchasing decisions and limiting them only to necessary cases.
First of all, those items of expenditure that we could define as less necessary are affected, such as clothing, whose prices are down by more than 1%, in favor of repair and maintenance services, which are experiencing a growth of about '1%. Furthermore, driven by the drop in the prices of raw materials, inflation has also become negative in the chapter on foodstuffs.
In the European comparison, similarities and differences emerge. In Spain and Germany, deflation is mainly driven by the fall in energy prices, while in France, as in Italy, the effect of weak demand appears more evident.
In 2014, in fact, Italian and French consumption recorded an average quarterly growth of 0,1%, while German and Spanish consumption by 0,5% and 0,8% respectively. Negative inflation, although it represents an element to be followed carefully, is accompanied by an increase in the purchasing power of households, favoring a recovery in consumption in the short term. In January 2015, hourly wages grew by 2% in real terms, while in 2012 they decreased by about 2%
Attachments: Focus no. 08-27 February 2015.pdf
