Italy's year-on-year inflation rate fell in May

Italy's year-on-year inflation rate fell to 0.9% in May; it’s lowest since November 1968, when it was 0.7%, according to reports.

According to National statistics bureau Istat, Italy’s year-on-year inflation
rate fell to 0.9% in May. Compared to April, when the inflation rate stood at 1.2%, the consumer price index rose 0.2%, Istat added. However, the statistic office said that Italian economy fell deeper into recession in the Q1 with GDP falling 2.4% from the previous quarter and this economic contraction in the first quarter was a touch higher than the expected 2.3% fall.

Mr. Guillaume Menuet of Bank of America said "I think we hit bottom in the first quarter, with sentiment surveys starting to rebound a bit in April. We will have another GDP fall in Q2 but not as negative as we have seen for Q1. According to the IMF, Italy's GDP contracted an estimated 0.6 percent in 2008 and will shrink 2.1 percent in 2009 and 0.5 percent in 2010. The economic recession is deepening, and, while a gradual recovery is expected in 2010, it added.

In news of interest for overseas property investors, Italy in recent years commenced structural economic reforms and programmes to improve the business environment to raise Italy's productivity and growth potential. The IMF hailed the policies of Silvio Berlusconi's government for the progress made in improving Italy's fiscal frameworks and the government's anti-crisis fiscal package, which "takes into account the limited room for fiscal stimulus, and focuses on temporary, targeted, and timely measures, as well as on accelerating public investment projects."

The European Central Bank (ECB) has held its main refinancing operations rate at one per cent. The marginal lending facility will stay at 1.75 per cent and the deposit facility is to remain at 0.25 per cent. Such a move signify that the bank is intending to keep the rate low for some time, which could mean that there is a widespread availability of low-priced mortgages for buyers looking for Italian property.