Italy’s Inflation Rate Unexpectedly Falls to 3.5% in August

Italy’s inflation rate unexpectedly declined in August as the deepening recession weighed on consumer demand.

The inflation rate based on European Union measurements dropped to 3.5 percent from 3.6 percent in July, Rome- based national statistics office Istat said in a preliminary report today. That was less than the median forecast of 3.6 percent by eight economists in a Bloomberg News survey. Prices rose 0.2 percent from July, Istat said.

Based on Italian methodology, prices rose 0.4 percent from the previous month and gained 3.2 percent from a year earlier, Istat said today.

Italian Prime Minister Mario Monti’s austerity drive has contributed to pushing the economy into its fourth recession since 2001. The government forecasts that the euro region’s third-biggest economy will contract 1.2 percent this year, while employers lobby Confindustria sees the economy shrinking by more than twice that rate.

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

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