Italian consumer prices miss forecasts by wide margin in June

The cost of living in Italy saw a large and unexpected drop in June, leading some economists to mark down their forecasts for euro-area wide data which were set for release at the end of the same week.

Italy's consumer price index fell by 0.2% month-on-month in June, according to ISTAT.

In comparison to a year-ago, prices were ahead by 1.2%, down from 1.4% in the month before (consensus: 1.3%).

Falls in the annual rate of change for prices of non-processed foods and non-regulated energy products were the main culprits, ISTAT said.

The former declined from 3.8% to 1.3% and the latter from 6.8% to 3.0%.

However, the rising cost of services meant that 'core' inflation, which excludes food and energy prices due to their volatility, in fact accelerated from a 0.7% gain in May to 0.9% for June.

On harmonised terms, Italy's CPI was down by 0.2% on the month and up by 1.2% on the year (consensus: 1.4%).

Following the data, economists at Barclays Research lowered their forecast for the headline Eurozone-wide rate of CPI which was set for release on Friday to 1.3% from 1.4%, with downside risks.

Their forecast for core euro area CPI was unchanged at 1.0%.