Eurozone inflation falls with marked CPI decrease for Italy

Inflation softens for the Eurozone as the consumer price index misses expectations of 1.2 per cent for September, coming in at 1.1 per cent, year-on-year. This is down from the previous figure of 1.3 per cent.

The core figure, which excludes volatile components like food, energy, alcohol and tobacco, was at 1.0 per cent year-on-year; it was expected to remain unchaged at 1.1 per cent.

James Howat, European economist at Capital Economics, comments on the data:

September’s euro-zone flash CPI figures confirmed that the ECB enjoys plenty of room to loosen monetary policy further. Headline inflation fell... to the lowest reading since early 2010. This was a little lower than consensus expectations of 1.2%. Although energy and food prices drove the fall in September’s headline rate, core inflation also decelerated slightly from 1.1% to 1.0%, suggesting that underlying price pressures remain very weak. Indeed, even after their recent pick-up, economic indicators still point to fairly anemic GDP growth in the near term. With inflation likely to fall further below the ECB’s target of ‘below, but close to, 2% inflation’ in the coming months, the ECB has plenty of scope to loosen monetary policy further. At the very least, further action to boost liquidity in the banking sector looks increasingly likely.

Political disruption over the weekend has seen Italy's consumer price index decrease and miss expectations, coming in at -0.3 per cent for the month of September, down from 0.4 per cent and expectations of -0.1 per cent.

Year-on-year, the index was up 0.9 per cent but down on the previous figure of 1.2 per cent and the expectation of 1.1 per cent.