Financial News: Italy Economic Growth Slows; Inflation Accelerates

Italy Economic Growth Slows; Inflation Accelerates

(RTTNews) - Italy's economic growth moderated slightly in the first quarter, while inflation accelerated to the highest level in more than two-and-a-half years amid higher energy costs, separate reports from the statistical office ISTAT showed on Thursday.

Gross domestic product advanced 0.2 percent sequentially, slower than the 0.3 percent increase in the fourth quarter, the flash data said.

The expenditure breakdown showed that there was a negative contribution from the domestic component before inventories, while there was a positive contribution from the net foreign component.

Gross fixed capital formation showed a stronger growth of 0.9 percent, while net foreign demand was not favorable as exports fell 1.2 percent amid a 1.0 percent increase in imports.

On the production side, an increase in value added in the services sector and a decrease in agriculture and industry.

On a yearly basis, GDP also advanced at a slower pace of 0.7 percent versus 0.9 percent growth in the previous quarter.

Italy's consumer price inflation quickened to 2.8 percent in April from 1.7 percent in March. Moreover, this was the highest inflation since September 2023.

The acceleration in inflation was primarily driven by a 9.5 percent surge in energy costs. The annual price growth in unprocessed food items quickened to 6.0 percent from 4.7 percent. Inflation based on recreational, cultural, and personal care services rose to 3.0 percent from 2.6 percent.

Excluding energy and fresh food, core inflation eased to 1.6 percent from 1.9 percent.

On a monthly basis, consumer prices moved up 1.2 percent, faster than the 0.5 percent rise in March.

Inflation, based on the harmonized index of consumer prices, also climbed to 2.9 percent in April from 1.6 percent in the previous month. The expected inflation rate was 2.5 percent. Monthly, the HICP increased 1.7 percent.

In a separate report, the statistical office revealed that the unemployment rate in Italy fell to 5.2 percent in March from 5.4 percent in February. The number of unemployed people decreased by 38,000 to 1.323 million in March compared to the previous month. Meanwhile, the employment rate held steady at 62.4 percent.

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