Italian inflation increases to 2%

Preliminary inflation data from 13 Italian cities was slightly stronger than expected in December.

Preliminary inflation data from 13 Italian cities was slightly stronger than expected in December.

The Italian city data pointed to a 0.2 per cent rise from November, with the annual rate accelerating to 2  per cent from 1.9 per cent the month before as tobacco and travel fares pushed up the index.

"Tobacco prices jumped as expected due to the hike in cigarettes at the start of the month," said Banca IMI economist Ms Annalisa Piazza.

"More surprising is the increase in transport prices, which is due not to petrol but to higher ticket prices connected with the holiday season."

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Earlier this week, German states showed annual inflation rates in the euro zone's largest nation were between 0.1 and 0.4 percentage points higher than in November.

The combined data from Italy and Germany, which together make up around 50 per cent of the euro zone economy, suggest that the flash estimate for inflation in the 12-nation bloc may show an upside surprise when it is published on January 4th.

In November, euro zone inflation eased to 2.2 per cent from 2.4 per cent in October but has not been below above the European Central Bank's 2 per cent reference ceiling since March.