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Italy may shift 2 billion euros from tax cuts to energy price curbs – sources

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Italy may shift 2 billion euros from tax cuts to energy price curbs - sources
© Reuters. FILE PHOTO: Italy’s Prime Minister Mario Draghi looks on during a news conference after signing an accord with French President Emmanuel Macron to try to tilt the balance of power in Europe, at Villa Madama in Rome, Italy, November 26, 2021. REUTERS/Remo

By Giuseppe Fonte and Gavin Jones

ROME (Reuters) -Italy is considering increasing by some 2 billion euros ($2.27 billion) funds set aside to curb energy prices next year, using resources previously planned to cut income and business taxes, three government sources said.

With international energy prices soaring, Mario Draghi’s government has already spent more than 4 billion euros this year to try to rein in utility bills by compensating companies that agree to cap their tariffs.

Draghi set aside a further 2 billion euros for next year in the 2022 budget approved by cabinet in October, but with energy cost pressures continuing to drive consumer price inflation, the government is now considering doubling that sum.

The money can be found because the government will use less than the 8 billion euros earmarked in the budget to cut income and business taxes, the sources said, asking not to be named because of the sensitivity of the matter.

With the Treasury aiming to trim the budget deficit to 5.6% of gross domestic product in 2022 from the 9.4% targeted this year, resources are limited.

The cabinet is likely to discuss the matter on Friday, one of the sources said.

The tax cut will focus mainly on income tax (IRPEF), reducing the number of tax rates to four from five, with the largest benefit going to middle-income tax-payers earning between 28,000 and 55,000 euros per year.

According to a preliminary deal reached among the ruling parties, the first tax band on annual income between 8,000 and 15,000 euros will be left at 23%. The second band, between 15,000 and 28,000 euros, will be lowered to 25% from 27%.

The third band, on income from 28,000 to 55,000 euros will get a more substantial cut to 35% from 38%.

The fourth band, on income from 55,000 to 75,000 euros will rise from 41% to 43%. This is the rate that is currently applied on income above 75,000 euros, effectively cancelling the fifth income tax band.

Draghi has been meeting delegations this week from parties in his national unity coalition to hammer out the details of the tax reform.

($1 = 0.8828 euros)

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Economic Indicators

Mexican economy stumbles in October after weak third quarter

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Mexican economy stumbles in October after weak third quarter
© Reuters. FILE PHOTO: Workers are seen in a building undergoing construction at Mexico City, Mexico January 30, 2020. REUTERS/Andres Martinez Casares

MEXICO CITY (Reuters) – The Mexican economy unexpectedly shrank by 0.2% in October from the previous month, as the country’s faltering recovery from the impact of the COVID-19 pandemic dragged into the fourth quarter, official data showed on Friday.

October’s seasonally-adjusted contraction was the third month-on-month decline in economic activity in a row, figures from national statistics agency INEGI showed.

A Reuters poll of analysts had forecast the economy would grow by 0.8% during October following a disappointing third quarter in which gross domestic product (GDP) shrank by 0.4%.

Compared to the same month last year, the economy grew in October by 0.3% in seasonally-adjusted terms. In unadjusted terms it shrank by 0.7%, the INEGI data showed.

Mexican business operations have been disrupted by bottlenecks in international supply chains, which have led to temporary work stoppages in industries including carmaking, a pillar of the country’s export-driven manufacturing sector.

But a breakdown of the INEGI figures showed the contraction in October was led by weakness in tertiary activities, which cover services, and by primary activities, which encompass farming, fishing and mining.

Primary activities shrank by 1.2% from September, while tertiary activities were down by 0.5%. By contrast, secondary activities, which include manufacturing, rose by 0.6%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Economic Indicators

Japan consumer prices rise at fastest pace in nearly 2 years on fuel costs

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Japan consumer prices rise at fastest pace in nearly 2 years on fuel costs
© Reuters. FILE PHOTO: Shoppers wearing protective face masks, following an outbreak of the coronavirus disease (COVID-19), are seen at a supermarket in Tokyo, Japan March 27, 2020. REUTERS/Issei Kato/File Photo GLOBAL BUSINESS WEEK AHEAD

By Takahiko Wada and Leika Kihara

TOKYO (Reuters) -Japan’s November consumer inflation marked the biggest year-on-year rise in nearly two years on surging fuel costs, a sign that the fallout from global commodity price gains is broadening.

The increase, however, is unlikely to prompt the Bank of Japan (BOJ) to withdraw monetary stimulus any time soon, with inflation still distant from the central bank’s 2% target, analysts say.

The data released on Friday highlights the fresh challenge policymakers face in preventing rising costs of living from hurting already weak household spending and Japan’s fragile economic recovery.

BOJ Governor Haruhiko Kuroda said on Thursday a weak yen could be inflicting bigger pain on households than before by pushing up prices of imported goods.

“Faced with price hikes for a range of daily necessities, consumers may become even more cautious in boosting spending,” said Yasunari Ueno, chief market economist at Mizuho Securities.

Japan’s core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, rose 0.5% in November from a year earlier, government data showed, exceeding a median market forecast for a 0.4% gain.

It was the biggest increase since February 2020 and followed a 0.1% rise in October.

The gain was driven by a 15.6% surge in energy costs. Food costs also rose 1.4%, indicating households were facing higher grocery costs even when wage growth remains slow.

Core consumer inflation is already above 1% when stripping away the impact of this year’s cuts in cellphone charges, which knock off 1.5% point off the index, analysts say.

“We expect underlying inflation to accelerate to a peak of around +1.0% next year as goods inflation rises further and the drag from mobile phone tariff cuts drops out of the annual comparison,” said Tom Learmouth, Japan economist at Capital Economics.

Japan has not been immune to global commodity inflation, with wholesale prices rising a record 9.0% in November from a year earlier.

But core consumer inflation has hovered around zero, as firms remain cautious about passing on costs to consumers on concerns that households may hold back on spending.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Economic Indicators

Japan’s core consumer prices rise at fastest pace in nearly 2 years

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Japan's core consumer prices rise at fastest pace in nearly 2 years
© Reuters. FILE PHOTO: Shoppers wearing protective face masks, following an outbreak of the coronavirus disease (COVID-19), are seen at a supermarket in Tokyo, Japan March 27, 2020. REUTERS/Issei Kato/File Photo GLOBAL BUSINESS WEEK AHEAD

By Takahiko Wada and Leika Kihara

TOKYO (Reuters) – Japan’s core consumer prices rose 0.5% in November from a year earlier, government data showed on Friday, marking the fastest pace of increase in nearly two years in a sign that the fallout from global commodity price inflation is broadening.

The increase, however, is unlikely to prompt the Bank of Japan (BOJ) to withdraw monetary stimulus any time soon, with inflation still distant from the central bank’s 2% target, analysts say.

The rise in the nationwide core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, was bigger than a median market forecast for a 0.4% gain.

It marked the biggest increase since February 2020 and followed a 0.1% rise in October.

The so-called ‘core-core’ inflation index, which excludes both food and energy prices and is comparable to the core price index used in the United States, fell 0.6% in November from a year earlier.

Japan has not been immune to global commodity inflation, with wholesale prices rising a record 9.0% in November from a year earlier.

But core consumer inflation has hovered around zero, as firms remain cautious about passing on costs to consumers on concerns that households may hold back on spending.

The BOJ maintained an ultra-loose interest rate policy last week, and governor Haruhiko Kuroda stressed his readiness to keep rates low, even as other major central banks head for an exit from crisis-mode stimulus measures.

Japan has lagged other countries in staging a strong rebound from last year’s pandemic hit to the economy, with its gross domestic product shrinking an annualised 3.6% in July-September due to weak consumer spending and output hit by a spike in coronavirus infections and supply constraints.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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