According to Tuttosport (h/t Raimondo De Magistris of TuttoMercatoWeb, via Owen Fulda of the Daily Star), Inter have set a price tag of €30 million (£26 million) for the midfielder having arrived in the summer of 2016 for £40 million.
Fulda reported the Gunners are thought to be eyeing the Portuguese and could make a move if Mesut Ozil leaves in January.
The 24-year-old has made 10 Serie A appearances this season but started just three.
Bleacher Report's Adam Digby noted his struggles in fitting in with his team-mates at Inter:
Indeed, as noted by Fulda, summer arrivals Borja Valero and Matias Vecino have been manager Luciano Spalletti's first choice.
Despite that, he has set up four goals, putting him half way to the tally he achieved in all competitions last season.
Ozil is in the final year of his contract, so January is the Gunners' last chance to cash in on him.
He put in an outstanding performance against Tottenham Hotspur in the north London derby on Saturday, as noted by John Cross of the Mirror:
The German is superlatively creative, per OptaJoe:
Replacing him will be no easy task, and Mario is perhaps not a player who can singlehandedly do that.
According to Squawka, Ozil created 3.10 chances per 90 minutes on average in the Premier League last term, while Mario created 2.43 in Serie A.
Mario could potentially still be an asset, but unless he can elevate his game to another level, he'll struggle to replicate Ozil's contributions long term.