Italy’s 'infernal' inflation

Italy’s year-on-year inflation rate last month jumped to 2.9%, its highest since July 2001, national statistics bureau Istat reported on Tuesday. The increase was a significant rise from the 2.6% rate for December...

The consumer price index in January rose 0.4% over the previous month. Compared to January 2007, the biggest price hikes were for transport (+5.4%), food and non-alcoholic beverages (+4.5%) and for housing and home utilities (+4%). Communication costs last month were 8.5% lower than a year earlier.

According to Istat, there were two-digit increases last month for unleaded fuel (+12.5%) and diesel (+15.8%) over January 2007. Istat’s January report incorporated annual modification made to the price basket used to calculate inflation. Added to the basket this year were prepackaged salad, satellite navigators, electronic console games, solid fuels and single portion meals.

Removed from the list were frozen hamburgers and braided sewing thread. The new price basket is now made up of 533 items, seven less than last year’s. Aside from the items dropped, several were grouped with goods and services.

Istat this year also changed the percentage each price variation played in calculating inflation, increasing the weight of prices for food, clothing, transport, education and Bars and restaurants. Playing a lesser role will be price variations for housing and home utilities.