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The report
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AI analysis
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Key arguments
- Energy prices accelerated sharply and are the sole driver of the headline inflation increase.
- Core inflation and services inflation remain subdued, with few indirect or second-round effects.
- The ECB is expected to hike rates in September, but further hikes are less likely unless energy shocks re-escalate.
- Italian inflation could reach around 4% before declining to around 3% by March 2027.
Risks
- Escalation of Middle East hostilities could push energy prices higher, increasing inflation and the likelihood of further ECB rate hikes.
- Underlying inflation may rise more than expected if indirect effects of energy costs materialize, especially in services.
- The AI-driven surge in technology goods prices could lead to higher non-energy industrial goods inflation.