Tuesday 30 June 2009

UPDATE:Italy June Inflation Slows To Lowest Rate Since 1968

UPDATE:Italy June Inflation Slows To Lowest Rate Since 1968

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By Luca Di Leo and Giada Zampano

ROME (Dow Jones)--Italy's consumer price index rose less than expected in June, as prices recorded their smallest increase in 40 years, pulled down by lower food and energy prices, data showed Tuesday.

Preliminary figures from Italian statistics office Istat showed that June consumer prices rose 0.5% on the year, the smallest increase since September 1968, after rising an annual 0.9% in May.

On the month, consumer prices rose 0.1%, following a 0.2% rise in May.

A Dow Jones Newswires poll of five economists had predicted that June consumer price inflation would settle at an annual rate of 0.7% and would be 0.2% on the month.

Italy's European Union-harmonized inflation also slowed to an annual 0.6% in June from 0.8% in May. The June figure was the lowest since the new series of the E.U.-harmonized consumer price index started in 2001.

Italy's core inflation rate, which strips out volatile food and energy prices, slowed to an annual 1.6% in June, compared with a 1.9% rate in May.

An Istat official said the price rise of pasta slowed to 2.1% on the year in June from 4.8% in May. The rise in bread prices slowed to an annual 0.9% from 1.1%.

The slowdown in Italian inflation was less marked than in the rest of the euro zone. Consumer prices in the 16 countries that use the euro declined on the year in June, the first negative consumer price index reading since records began in January 1997.

European Union official statistics agency Eurostat said Tuesday that consumer prices in the euro zone fell 0.1% on the year in June. In May, consumer prices were flat on the year.

The annual CPI readings remain well below the inflation level of around 2% that the European Central Bank targets in the medium term.

Istat Web site: www.istat.it

-By Luca Di Leo and Giada Zampano, Dow Jones Newswires; +39 0669766921; luca.dileo@dowjones.com

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(END) Dow Jones Newswires

June 30, 2009 07:38 ET (11:38 GMT)

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