And now Lagarde & Co have to cut back. Eurozone inflation fell to 1.8% in September from 2.2% in August. We are below the 2% objective that has guided Frankfurt’s monetary policy of increases in recent years. Yesterday ECB President Christine Lagarde spoke clearly to the European Parliament: “The latest developments strengthen our confidence that inflation will return to target in a timely manner. We will take this into account in our next meeting in October”. The data released today by Eurostat push in this direction, for the next Council on 17 October.
Average inflation in the Euro area is 1.8%, therefore returning below the ECB’s target threshold after three years. The latest similar data dates back to April 2021. The highest prices are recorded in services (4%, however down compared to 4.1% in August), followed by food, alcohol and tobacco (2.4%), and goods industrial (0.4%). Energy is still down (-6%, after -3% in August). Looking at individual countries, inflation in Germany fell to 1.8% in September, in Spain to 1.7%, in France to 1.5%, in Italy to 0.8%. The highest values in Belgium (4.5%) and Estonia (3.2%) and the lowest in Ireland (0.2%) or Lithuania (0.4%).
Preliminary ISTAT data on inflation in September in Italy were released yesterday. +0.7%, the lowest value since the beginning of the year. A decline mainly linked to the reduction in prices of energy goods, which recorded a decrease of 8.7%, accelerating compared to -6.1% in August. Services, in particular those linked to leisure, culture, personal care and transport, also contributed to the slowdown in inflation on a trend basis. In September, underlying inflation fell to +1.8% (from +1.9% recorded in the last three months).
But the prices of the shopping cart continue to rise. In fact, in the food sector, an annual increase of 1.1% was recorded compared to +0.6% in the previous month. This has resulted in increased costs for basic necessities, such as food and drink, which have a direct and immediate impact on family budgets. For this reason, the Consumers Union has defined the drop in inflation as an “optical effect”. A sort of temporary illusion due to the double-digit increases during the holiday period. And in fact the largest decreases were recorded in September in transport (down 2.2% compared to August) and in the recreational and cultural sector (-1%). The data on the shopping cart with food and non-alcoholic beverage products is worrying, as it increased by 1.4% on an annual basis, an increase of 0.4% in just a month. “The trend inflation of +0.7% means, for a couple with two children, an overall increase in the cost of living of 123 euros on an annual basis (113 for food and non-alcoholic drinks). For a couple with a child, the additional annual expense is equal to 122 euros”, explains Massimiliano Dona, president of the National Consumers Union.
