Inflation Italy: as long as there isprice increase?
The question arises among consumers, economists and politicians, considering that energy and goods in the so-called shopping cart have jumped to historic levels in our country.
An initial response came from the European Commission’s autumn forecast of 11 November. In addition to estimating a recession for the region – including Italy – for 2023, the price indications have not been heartening and next year the inflation rate it will still be very high.
Meanwhile, although i gas prices cooled compared to the record levels of the summer, the raw material so crucial for the Italian economy recorded an increase of 700% compared to pre-pandemic levels. It will not be easy to dampen this leap and return below 100 euros per megawatt hour, especially with the unknown war in Ukraine and supplies for next winter.
With these premises, it is legitimate to ask when the increase in inflation in Italy will end, looking for possible answers in data and forecasts.
Inflation in Italy: how much have prices risen?
The preliminary Istat data for October has alarmed Italy: inflation has jumped up to 11.9% annually (compared to October 2021), with a record shopping cart: goods food, home care and personal care recorded a variation of 12.7% and products with a high frequency of purchase saw a + 8.9%.
To better understand the extraordinary nature of the price increase, these graphs prepared by the Financial Times will suffice. The first shows the average price (euro per kWh) weighted for the end user including transport and electricity taxes in the main European economies: the leap of Italy is evident and lasting throughout 2022:
Electricity prices in the main European countries
Increases in comparison
The comparison between the increase of the GDP and price growth is another indicator to consider: the stagflation is it already here? Stagflation is a period of high inflation with stagnant demand. The range is wide in Italy:
Comparison of GDP and inflation in Italy
Stagflation risk?
The most worrying point is that, although the surge in prices has occurred above all in the energy sector, it is precisely the capacity of contagion in all productive sectors of the increase in the cost of gas andelectricityhas pushed prices for consumers in all areas.
Prices on the rise in the different categories
Focus on inflation by sector in Italy
As stated by the European Commission, even if gas prices are easing, the wave of complementary increases is now underway, ie in goods and services that use the most expensive energy source and which carry the increase back to the final consumer.
At this point, with an in-depth analysis of the situation ofinflation in Italyone may ask: how long will the price increase be?
When will the price increase in Italy end?
The European Commission’s forecasts were clear: inflation in the EU will rise to 9.3% in 2022 and 7.0% in 2023, with a more marked decline to 3.0% in 2024. These are all upward estimates compared to the forecasts of last July, which reveal a still significant increase in prices for the next two years, well beyond the 2% target of the ECB.
And in Italy? Prices will not fall enough in 2023, when they are at 6.6%, before falling further to 2.3% in 2024.
Furthermore, for our country it is estimated that:
“With the’high inflation and weak employment growth weighing on real disposable income, consumer spending is likely to stagnate next year. With the alleged easing of price pressures and a moderate acceleration of wage growth, private consumption is expected to pick up again in 2024. “
Basically, to try to identify when the increase ininflation in Italywe will have to wait until at least 2024. In the meantime, hoping that the recession will not come true.
Italy: when will the increase in inflation end? What to expect