According to a report by the Italian National Institute of Statistics, the Consumer Price Index in Italy rose by 0.4% in April. The rise resulted from increases in the price of transportation, hotels, and food service. The annual inflation rate rose to 1.9%, largely due to rises in the prices of electricity and natural gas. The increase occurred even though consumer demand has been weak, so prices are likely to rise less in future months unless household spending strengthens.
The German economy expanded by 0.6% in the first quarter of 2017 according to the Federal Statistical Office. This was slightly below expectations but still well above the 0.4% increase in the fourth quarter of 2016 and the strongest increase since the first quarter of 2016. This would suggest annual GDP growth of 1.7%. The increase in GDP resulted from increases in both domestic and foreign demand. Domestically, there was a notable increase in construction and in machinery and equipment. Household and government spending also rose. Exports increased faster than imports. This first report for 2017 indicates growth that is strong and well-balanced that is likely to continue throughout the year.
The Consumer Price Index increased 0.2% in April, the U.S. Bureau of Labor Statistics reported this morning. Over the last 12 months, the CPI rose 2.2%. This is a larger increase than the 1.7% average annual increase over the past 10 years. This indicates that inflation has definitely moved to the range targeted by the Federal Reserve.
The rising cost of housing, energy, tobacco, and food all contributed to the increase in overall inflation. Food prices rose mostly due to a sharp increase in the prices of fresh vegetables. At the same time, many prices fell in April, including those for mobile phone services, medical care, car insurance, clothing, and new and used cars and trucks.