- Prior +2.9%
- HICP +3.2% vs +3.4% y/y expected
- Prior +2.9%
Italy’s inflation rate accelerated in August 2026, driven primarily by a sharp increase in energy costs. The Consumer Price Index rose by 0.5% compared with July and increased by 3.3% on an annual basis, up from 2.9% in the previous month.
The main driver behind the acceleration was the energy sector. Prices for non-regulated energy products climbed 16.9% y/y, accelerating from 11.4% in July. Meanwhile, regulated energy products rose 18.8% annually, compared with 14.8% in the previous month.
The strong rise in energy prices contributed significantly to the monthly increase in the overall index. Regulated energy products increased by 3.2% compared with July, while non-regulated energy products rose by 2.8%.
While energy costs pushed headline inflation higher, price pressures in several service sectors moderated. Annual inflation for services related to recreation, repair and personal care slowed to 2.6% from 3.0% in July. Transport-related services also recorded a noticeable deceleration, with annual growth easing to 0.9% from 1.6%. As a result, overall services inflation declined to 2.4% y/y, down from 2.7% in the previous month.
Inflation for goods accelerated considerably during August. The annual growth rate for goods rose to 4.1%, compared with 3.2% in July, highlighting the growing impact of higher energy costs on the broader goods sector. The widening gap between goods and services inflation suggests that energy-related price pressures remain concentrated in physical products rather than labor-intensive service industries.
The data should reinforce ECB’s lack of appetite for further tightening and might lead to a less hawkish stance. Overall, US-Iran developments and oil prices will continue to be important for inflation and might keep central banks on a more defensive stance for longer, that unless growth data starts to disappoint.
