Inflation bites the pockets of Italians. And it becomes the first obstacle that the newly installed Meloni government will have to face. The October data released by Istat are one unexpected shock that far exceeds all expectations. The consumer price index flew from + 8.9% to 11.9% – the highest level since March 1984 – with a cyclical increase over September of 3.5%. An increase of three percentage points on the trend and even of 3.5% in the economic situation, had not been foreseen by any analysis.
This is the strongest leap since 1954, the year in which Istat’s historical series began, none of the two oil crises of the last century, during which the level of inflation went over 20%, had managed to do so much. The scenario appears even more distorted in the face of the Istat data on the level of wages: employee payslips benefited from a zero increase from September to August and an irrelevant + 1.2% on September 2021.
Energy prices are running and pushing food products to double-digit growth as well. It becomes urgent to act. This was also stated by the Italian Prime Minister Giorgia Meloni who, speaking with the German Chancellor Olaf Scholz, reiterated – it is written in one of the first press releases released in the new role – “the urgency of concrete measures to reduce energy prices”. Trade unions, businesses, consumers and the Democratic Party also say so, asking the government to intervene almost with one voice. For Sbarra della Uil and Fracassi of the CGIL, interventions must be “immediate” and support the income of “employees and retirees”. Because with this inflation “it is as if the workers did not receive the thirteenth” they say from the CGIL.
Businesses and consumers are also asking for action against “expensive bills”. “The most inequitable tax, inflation, has reached levels of almost 40 years ago. Majority and government focus on this and not on amnesties and cash. We are there”, attacks Debora Serracchiani, leader of the Pd in the House shortly after the flash. on inflation. But, Pd aside, the peak of inflation in October does not ignite the political debate.
Otherwise, the Milan Stock Exchange, and its European sister companies, are worried, and they slip into negative terrain and then recover with difficulty (Milan closes negative). The performance of government bonds also worsened, the yield of the Italian BTP rises again, returning to over 4% (4.19%), the German Bund exceeds 2% and the spread rises to 208.5 points and then closes above 206 (4.15% yield). In October, inflation also bites in Germany and France.
The first reached a + 10.4%, (the highest level since the reunification of the two Germanys) and the second a + 6.2% (the highest since 1985), Spain did better than, managing to contain energy prices managed to bring down inflation from 8.9% in September (it was the same level as Italy) to + 7.3% in October. While Portugal, worried about inflation at + 10.2%, is thinking of extending the law that taxes extra profits to supermarkets and large food distribution chains.
Returning to Italy, the first culprit of the unexpected acceleration in October is the price of energy goods (which went from + 44.5% in September to + 73.2% in October with a jump of almost 29 points). The first victim is the “shopping cart” which went from 10.9% to 12.7%. Energy has given a “strong acceleration” to the performance of the general index, while food has contributed to a much lesser extent. Among the energy sectors, it is the electricity prices that give the greatest impulse – observe the analysts of Intesa San Paolo – with bills up 62.7% on September on the free market and 51.9% on the protected market. As for Gas (which today closed up at € 112.24 per MWh), the price trend of the city and natural gas prices recorded an increase of 63.9% on the free market, while on the protected market reports in October a stagnation of prices due to the new method introduced by ARERA, for the updating of gas tariffs on the protected market.
CODACONS, STRAIGHT OF MORE THAN 3600 EUROS FOR FAMILIES
Inflation at 11.9% is disastrous and determines a record sting for Italians, considering the total consumption of a “typical” family, equal to +3,655 euros per year. Only for food (+ 13.5% in October) a nucleus finds itself spending an average of +752 euros on an annual basis. Thus Codacons worried about “Christmas consumption” and “for trade and the national economy” which, according to Codacons, the Government could help “by immediately ordering the cut in VAT on food”.
TRADE UNIONS: THE GOVERNMENT TAKES ACTION IMMEDIATELY
“The government intervenes with rapid and effective measures to stop the race in the prices of energy and food. We need a great agreement for a new income policy that protects wages and pensions from the surge in inflation. This is the priority today”. This is what the secretary general of the CISL, Luigi Sbarra, underlines on twitter, regarding the Istat data on inflation.
Istat estimates on inflation in October “confirm that the surge in prices does not stop and, on the contrary, becomes double-digit, as it had not happened for almost forty years. Important measures are needed and they are needed now”, says the deputy secretary general of the CGIL, Gianna Fracassi, underlining that “energy and food contribute heavily to increase prices and speculation”. And also that “the loss of purchasing power in 2022 would be over 1,800 euros. It is as if workers and employees did not receive the thirteenth. An even more serious situation for pensioners, temporary workers, self-employed young people, unemployed”.
DEALERS: THE PRICE Hike A SHOCK
“The sharp acceleration recorded in October by inflation, higher than our estimates (9.8%), undoubtedly represents a shock for our system. In fact, in just one month there was a change in prices (+3.5 %) similar to that recorded overall between 2017 and 2021. The tensions, which have led to exceptional price growth rates in the energy sector, are now spreading to all sectors, mainly consumer goods “. Thus the Confcommercio Research Department commenting on Istat’s preliminary estimates on October inflation.
“This situation is unfortunately not destined to record substantial changes in the short term, also in light of the increases that are being observed in the phases preceding consumption with producer prices which, in September, signal a + 41.8% on a annua “states the Confcommercio Research Department. “In this context – continues the note – households have increasing difficulty in maintaining the current consumption mix, being forced to shift an increasingly significant portion of their income, in real terms, towards basic expenses (energy , food, etc.) In light of this situation, which could lead to a sharp halt to the recovery of demand for consumption by households, the fears of a prolonged recession, which goes beyond the period between the end of 2022 and the ‘beginning of 2023, are becoming more and more concrete. It should be remembered – concludes Confcommercio – that from the beginning of 2023 a reduction in energy costs will be observed, at least temporary, with some benefits on the dynamics of consumer prices. ”
