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1484d589a7b5d102c8a29713342d512113e176b231cd48f2a2057c32c788faa1;;[{"layout":"detailed","uid":28224,"publicationDate":"01 Jul 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183666.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPRjevfYGAe4tqLnbyr0sCE=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - Italy\u00b4s inflation: up strongly due high energy prices and their effects","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> Italian consumer-price inflation rose to 8.0% in June, from 6.8% in May. While it is still a preliminary estimate, the June inflation print was higher than expected (UniCredit: 7.6%; consensus: 7.4%) and marked its highest level since 1986. <\/li><li> Energy prices have been the largest contributors to inflation, also in June, showing higher-than-expected increases, but core inflation (and, especially, services inflation) also rose. Food prices showed another strong increase, being up by 8.8% yoy in June. This increase was in line with our expectations.<\/li><li> In terms of rising energy prices, their main driver has been the impact on motor-fuel prices of increasing oil prices. The price of Brent rose to about USD 117 per barrel, on average, in June amid market reactions to the approval of oil sanctions by the EU and the OPEC\u00b4s inability to honor its production commitments. The government has recently allocated further resources to mitigate the increase in motor-fuel prices during the summer. Still, the volatility in oil prices induced by the Russia-Ukraine conflict leaves uncertainty regarding the future inflation path very high.<\/li><li> Electricity and gas prices were up in June, mainly due to price increases in the non-regulated market. For the third quarter, the Regulatory Authority for Energy announced yesterday a 0.4% increase in electricity tariffs and stabilization of gas tariffs. This came after the government allocated further resources to mitigate the impact of high gas prices on the market. This should help control price increases in the coming months. According to the Regulatory Authority, without government intervention, electricity prices for households could rise by 15% and gas prices by 45% in the third quarter. <\/li><li> With regard to other less-volatile components, there was another increase in prices for services in June. The main driver was a rise in prices in the hotel and restaurant categories and in air tariffs, which has proved stronger than we projected. This is mainly related to a positive impact on services spending of the lowering of pandemic restrictions during the spring. As a consequence, core inflation confirmed a strengthening of its path.<\/li><li> We currently expect CPI inflation to be at 6.4% this year and 2.3% in 2023. The deceleration in energy prices that we project would start at the end of the year is still expected to prompt a decline in inflation in 2023.In greater detail:CPI inflation rose to 8.0% in June, from 6.8% in May. Headline CPI was up by a strong 1.2% mom, following a 0.8% mom increase in May. Core inflation rose to 3.8%, from 3.2% in May. CHART 1: CPI INFLATION IS STILL TRENDING HIGHER<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Loredana","last":"Federico","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=14&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=f79e47dce659611d0660b0c3359f171b"}],"hash":"1484d589a7b5d102c8a29713342d512113e176b231cd48f2a2057c32c788faa1","available":"0","settings":{"layout":"detailed","size":"default","showanalysts":"2","showcompanies":"2","showcountries":"2","showcurrencies":"2","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"5"}},{"layout":"detailed","uid":28210,"publicationDate":"29 Jun 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183650.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPRjevfYGAe4I4tua3mCuHw=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Downside risks to growth building (3Q22)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> GDP growth will probably slow to 3.0% this year (previously 3.3%) and 2.8% next year (from 3.4%). Headwinds from the Russia-Ukraine conflict have combined with COVID-19 lockdowns in China to push inflation up further and slow the pace of economic activity. Central banks have become even more hawkish. Tighter financial conditions, a squeeze in real incomes and a sharp downturn in consumer confidence will increasingly weigh on activity. Trade is weakening, also reflecting a switching of expenditure away from goods. Global inflation will probably peak soon, but the speed and extent of the subsequent decline remains highly uncertain. We think that central banks and markets are underestimating the downside risks to growth. If Russian energy imports suddenly stop, much of Europe will likely see negative GDP growth for 2023.<\/li><li><strong> US: <\/strong> We forecast GDP growth of 2.4% this year and below-potential growth of 1.3% next year. Economic momentum is slowing, particularly for interest-rate-sensitive sectors such as housing and durable goods. CPI inflation will likely peak at about 9% yoy in 3Q22, with monthly inflation prints likely easing to levels consistent with target by around the turn of the year. Longer-run measures of inflation expectations are still well anchored and average hourly earnings growth is moderating. We expect the Fed to raise the target range for the federal funds rate into restrictive territory by the end of the year, to 3.25-3.50%, which we see as the peak. Rate cuts could start in late 2023.<\/li><li><strong> Eurozone: <\/strong> GDP is likely to expand by 2.8% this year and by 1.3% in 2023. Survey indicators signal a weakening of growth momentum in the spring and downside risks for economic activity in 2H22. Headline and core inflation have further to rise, although we see initial signs that pipeline price pressure might start easing soon from extremely high levels. Weak growth and slowing inflation will probably force the ECB to stop hiking in 1Q23 once the depo rate reaches 1.25%, i.e. the lower end of the 1-2% range the central bank regards as 'neutral'. We expect the announcement of a credible anti-fragmentation facility featuring potentially unlimited purchases and light conditionality.<\/li><li><strong> CEE: <\/strong> The EU-CEE economies will likely grow on average by 3.6% in 2022 and 2.6% in 2023, with the Western Balkans lagging. Turkey could grow by 4.4% in 2022 and 3.3% in 2023. In Russia, the economy could shrink by around 10% this year and stall next year. Hungary and Slovakia would experience the biggest direct impact from a lack of Russian energy imports, followed by Bulgaria, Czechia and Serbia. Inflation is likely to peak this year in most CEE countries, except for Hungary and Poland, where the peak could be postponed to 2023. Inflation is expected to remain well above targets in 2023. We think that central banks will end rate hikes in the autumn, but the scope for rate cuts in 2023 is very limited. The CBR could cut the policy rate to 8% in 2022 and to 7% in 2023. The CBRT might hike in 2023 if there is a change in government.<\/li><li><strong> UK: <\/strong> We forecast GDP growth of 3.4% this year and 0.6% next year. The economy will be skating on the edge of recession for the next few quarters amid a big squeeze in real disposable income. Inflation is set to stay higher for longer in the UK compared to peers, peaking at above 9% yoy in 4Q22, but should fall quickly to below 2% by end-2023. The BoE will probably stop raising the bank rate after a final 25bp hike to 1.50% in August.<\/li><li><strong> China: <\/strong> GDP will likely grow by 4.0% in 2022 and by 4.2% in 2023. While most COVID-19-related restrictions were lifted at the beginning of June, the supply side of the economy is recovering faster than the demand side as Chinese consumers continue their cautious behavior to avoid quarantines. The central government is stepping up efforts to support the economy and reduce the negative impact of future waves of contagion on the domestic economy through a combination of monetary and fiscal policy measures. The PBoC might tolerate further weakening of the CNY towards 7.00 against the USD to support exports. <\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":27812,"publicationDate":"29 Apr 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183161.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJHlYjR85eD_wZmfA_Qt9ZnY=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - Italy: inflation eases in April, but the outlook is highly uncertain","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> According to preliminary estimates, Italian consumer price inflation declined to 6.2% in April, from a downwardly revised 6.5% in March. April\u00b4s decline interrupts a nine-month period of consecutive increases. CPI was up by 0.2% mom in April, from a 1.0% mom increase in March. The easing of inflation in April has been primarily driven by lower prices in energy products in both non-regulated and regulated markets. <\/li><li> Following the increase in motor-fuel prices in March triggered by the surge in oil prices at the onset of the Russia-Ukraine conflict, a downward correction in April has been prompted by government intervention to reduce motor-fuel prices by EUR 0.25 per liter from 22 March. This factor mainly contributed to a decline in prices in the transport category. While it has still not been formally approved, it is likely that the reduction in motor-fuel prices will be extended until the end of 1H22.<\/li><li> For 2Q22, the Regulatory Authority for Energy announced a 10% cut in electricity and gas tariffs, after a strong increase had been penciled in for 1Q22 (+55% and +42%, respectively). This was also partly due to the measures approved by the government to mitigate the increase in energy costs for the private sector. While the effect of the cut will be felt throughout the second quarter, due to potential spillover to non-regulated gas and electricity prices, the bulk of it materialized in April, with the prices of energy products in regulated markets down by 8.8%, compared to March.<\/li><li> The April inflation report also shows further increases in food prices, which proved to be much stronger than expected. As we have argued in the past, this reflects indirect effects of high energy costs and the Russia-Ukraine conflict on food commodity prices. The indirect effects of higher commodity prices are also affecting prices of goods other than energy and food. Moreover, there has been a strong increase in services prices, mainly driven by a rise in air tariffs caused by the Easter holiday season. This upward movement in services prices related to transport is likely to correct in May. Overall, core CPI inflation rose above 2% for the first time in a decade to 2.5% in April from 1.9% in the previous month.<\/li><li> We confirm our expectation of an increase in headline inflation to 5.8% in 2022, from 1.9% last year. Still, inflation projections for the coming months remain subject to uncertainty related to oil and gas supplies, especially after this week\u00b4s news concerning Poland and Bulgaria.In greater detail: Motor fuel prices were down by 9.5% mom in April, compared to March, when they rose by 8.1% mom amid a surge in oil prices. CHART 1: BIG CORRECTION IN MOTOR FUEL PRICES<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Loredana","last":"Federico","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=14&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=f79e47dce659611d0660b0c3359f171b"}],"countries":[{"name":"Italy","ticker":"IT","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=5&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=39d7224c0452f3251d42f8f8656acb2b"}]},{"layout":"detailed","uid":27809,"publicationDate":"29 Apr 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183158.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJHlYjR85eD_weDmA4MRRrys=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - Italy\u00b4s GDP dragged down by high energy costs and COVID-19 restrictions","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> According to the preliminary estimate, Italy\u00b4s real GDP declined by 0.2% qoq in 1Q22, showing a deterioration compared to 4Q21, when it rose by 0.7% qoq (revised slightly upward compared to 0.6% previously). Real GDP remains below its pre-pandemic level of 4Q19 (-0.4%). Today\u00b4s outcome seems to hint at some resilience of industry in March, after the start of the Russia-Ukraine conflict.<\/li><li> The weak GDP reading in 1Q22 was mainly triggered by a stabilization in activity in industry (including construction) and a decline in services. For the former, this probably reflects some weakness in manufacturing output, which has been affected by high energy costs, and the intensification of supply-side constraints, while construction activity held up relatively well, also thanks to fiscal support. The decline in services activity was probably largely due to the spread of the Omicron variant, which was already weighing, for example, on food and accommodation service activity in 4Q21.<\/li><li> Net exports were a drag on economic activity, while domestic demand (including inventories) provided a positive contribution. When more details are made available at the end of May, we expect to see a quarterly contraction in private consumption and a slowdown in fixed investment, as COVID-19 restrictions limited spending on services and high energy costs started to dent household purchasing power and firms\u00b4 profits. The household savings rate stopped declining in 4Q21 (close to 13%), remaining well above its pre-pandemic level. Sharp deterioration in consumer sentiment induced by the Russia-Ukraine conflict might have further discouraged households\u00b4 propensity to consume, despite the availability of large excess savings. A worsening of firms\u00b4 profit margins and liquidity had already started at the end of 2021 and is likely to have continued in 1Q22. <\/li><li> Looking ahead, we expect another weak reading in 2Q22, as the Russia-Ukraine crisis will take its toll on business activity and demand, as suggested by the latest confidence indicators. Services activity is likely to partly benefit from a lower Omicron-variant infection rate and the reopening of the economy that started at the end of 1Q22, which has already supported tourism activity in April. A constructive picture remains dependent on a stabilization in market prices for natural gas. As seen recently, this trend might swiftly shift as a result of negative news regarding oil and gas supply, increasing uncertainty.In greater detail: Industrial production (excluding construction) was down by 1.6% in the period January-February, compared to 4Q21. The output reduction was widespread among almost all sectors (including energy).CHART 1: CONTRACTION IN INDUSTRIAL PRODUCTION DUE TO HIGH ENERGY COSTS<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Loredana","last":"Federico","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=14&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=f79e47dce659611d0660b0c3359f171b"}],"countries":[{"name":"Italy","ticker":"IT","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=5&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=39d7224c0452f3251d42f8f8656acb2b"}]},{"layout":"detailed","uid":27596,"publicationDate":"31 Mar 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182916.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJW4PBk9_ILJDSmgwdeU13o=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - Italy: Another rise in inflation, mainly driven by the oil-price surge","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> Italian CPI inflation has risen to 6.7% in March, from 5.7% in the previous month, according to Istat\u00b4s preliminary estimate, the highest reading since July 1991. The rise has mostly been driven by a further increase in energy and food prices, while core inflation has shown a more limited increase. <\/li><li> The price category that has contributed the most to explaining the increase in March inflation is energy products, especially prices of energy in non-regulated market. This is mainly due to the surge in motor fuel prices caused by the significant increase in oil prices observed in March, which rose by 20% mom following the onset of the Russia-Ukraine conflict. The government intervened quickly to mitigate the impact of these increases, with a EUR 0.25 per liter reduction in the price of motor fuel for one month, beginning on 22 March. Still, its benefit will primarily be felt in April, while in our projections we are assuming a gradual phase-out in May.<\/li><li> Electricity and gas prices have also increased further, especially gas in non-regulated markets. Despite the spikes due to the Russia-Ukraine crisis, the evolution of the market prices of natural gas in the first quarter proved to be more benign than initially feared. This will positively affect the price of electricity and gas bills for 2Q22, for which the Italian Authority for Energy has just announced a 10% qoq decline, also thanks to the relief provided by government support measures. This is good news as it represents a pause in the increase in prices for gas and electricity observed since 3Q21 that has strongly contributed to the rise in inflation so far.<\/li><li> A look at the other price categories shows increases in prices of non-energy and non-food goods, while services inflation was unchanged in March (at 1.8% yoy, +0.3% mom). Prices of non-energy and non-food goods rose by 1.6% yoy (+0.6% mom), up from 1.1% yoy in February. Once again, this was mainly driven by a further rise in the prices of durable goods, which are probably the most affected by the ongoing increase in raw materials.<\/li><li> Overall, we expect CPI inflation to rise to close to 6.0% in 2022 (from 1.9% in 2021) before declining to 1.6% in 2023.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Loredana","last":"Federico","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=14&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=f79e47dce659611d0660b0c3359f171b"}],"countries":[{"name":"Italy","ticker":"IT","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=5&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=39d7224c0452f3251d42f8f8656acb2b"}]}]


Dr. Loredana Federico
Chief Italian Economist
UniCredit Bank AG, Milan
Piazza Gae Aulenti, 4 - Tower C -
I-20154 Milan
+39 02 8862-0534

Loredana Federico has worked as an economist in the Research department at UniCredit CIB since 2009. She is based in Milan, and her main area of coverage is Italy. Loredana joined UniCredit Group i...

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