Italian flash December HICP inflation was in line with consensus at +0.5% Y/Y (vs +0.6% prior) and +0.2% M/M (vs a downwardly revised -0.6% prior).

• National CPI was 0.1pp lower than expectations on the annual and monthly readings at +0.6% Y/Y (vs a downwardly revised +0.7% prior) and +0.2% M/M (vs a downwardly revised -0.5% prior).
• ISTAT's measure of core CPI (ex-energy/unprocessed food) was +3.1% (vs +3.6% prior), with both non-energy industrial goods and services inflation slowing on an annual basis. HICP (ex-energy/unprocessed foods) was +3.2% Y/Y (vs +3.7% prior).
• Annual food inflation was broadly steady in the CPI and HICP prints, with falls in processed foods inflation offsetting rises in unprocessed food counterparts.
• As such, core HICP according to Eurostat's definition (ex-energy, food, alcohol and tobacco) decelerated to +3.0% (vs. +3.3% prior).
• Services CPI moderated to +3.3% Y/Y (vs +3.7% prior), with services HICP falling to +3.5% Y/Y (vs +3.8% prior), with a deceleration across the major subcategories on a Y/Y basis.
• With respect to energy, both regulated and non-regulated prices deflated on the month, with overall energy CPI inflation falling -24.7% Y/Y (vs -24.4% prior). Energy HICP was -25.0% Y/Y vs -24.6% prior. Thus, while negative Y/Y base effects relating to energy appear to be losing momentum, they have still not quite bottomed out.