Why raising rates lowers inflation: Istat data from January 2023

Why raising rates lowers inflation: Istat data from January 2023

Inflation decelerates in January, while sports medical exams, smartphone repairs and smart audio equipment enter the Istat 2023 basket. According to the Statistics Institute, in the first month of the new year the national consumer price index registered an increase of 0.2% monthly and 10.1% in annual terms, compared to +11.6% in the previous month.

Good news for Italy, although in Italy the figure remains in double digits, while in the eurozone it has dropped to 8.5%. “Preliminary estimates show the net attenuation of inflation”, stresses Istat, recalling that this is a level that has not been registered since September 1984 on a trend basis.

The deceleration is supported by the reversal of the trend in regulated energy goods (-10.9% in annual terms), although generalized tensions remain in the prices of several product categories, such as processed food, other goods (durable and non-durable) and housing services, which contributed to the slight acceleration of the underlying component. Furthermore, the trend in fuel prices is accentuated in January.

At the same time, the “shopping cart” also slowed down, with food, household and personal care products registering a fall in trend from +12.6% to +12.2%. Conversely, that of frequently purchased products increased (from +8.5% to +9.0%).

New year, new basket. In addition to the aforementioned sports medical examination, repair of smartphones and intelligent audio equipment, a walker and aesthetic massage are also included. In the food sector, highlights include captured tuna and farmed turbot, as well as fruit (oranges, tangerines, lemons, bananas, apples, pears, peaches, kiwis) and vegetables (salad tomatoes, aubergines, courgettes, peppers, carrot, onion) organic.

The basket, used to calculate the Nic indices (for the entire national community) and Foi (for households of manual and oral workers), presents 1,885 elementary products (1,772 in 2022), grouped into 1,061 products, in turn grouped in 423 aggregates. According to Luca Solari, head professor of business organization at the University of Milan and director of the Walter Tobagi School of Journalism, this is “the trend of the moment” that runs the risk of not having “a direct link with an analysis relative to the real data of the composition of household expenditure”.

For Solari “it is clear that there is a theme of need, adaptation and adjustment of the mix over time but, if the data we have about the country, for example regarding the percentage of people below the poverty line, are realistic, maybe we can it should reassess it a little more about what are the essential consumptions and perhaps with regard to the latter, insert the elements of technology in a more tempered way”.

Source: IL Tempo