Italy falls into deflation, first time in more than 50 years

Italy's consumer price index (CPI) decreased 0.1 percent in August year-on-year, preliminary data by the Italian National Institute for Statistics (ISTAT) revealed on Friday.
The country thus entered deflation for the first time in more than 50 years, ISTAT said.
The national consumer price index, used to measure inflation over the entire Italian economic system, had increased 0.1 percent in July.
Italy was last dragged into deflation in September 1959, when the price index fell 1.1 percent after a seven-month period of negative rates. Yet, at that time, the economy was going through a positive trend of growth, ISTAT pointed out.
Energy, the cost of fuel especially, weighed on the consumer price index's negative trend in August more than any other component, according to ISTAT preliminary estimates.
Energy prices decreased 1.2 percent compared to August last year, with gasoline and diesel prices declining 0.9 percent and 1.7 percent respectively.
Another key factor was the slowdown in the year-over-year growth of services prices, the agency added.
The so-called ISTAT "shopping basket," which comprises prices for food, essential goods and services related to housing and person, was also in deflation in August, with a 0.2 percent decrease compared to last year.
Yet, it showed a moderate recovery from the 0.6 percent drop in July.