Energy costs spark inflation surges in France, Italy

Inflation is once again causing concern in Italy, with the consumer price index for the entire population jumping by 0.7% month-on-month in September, according to preliminary estimates from Istat. This brings the annual rate to 4.2%, marking a three-year high. The previous peak was in September 2023, when the annual rate was 5.3%. The psychological impact of inflation is particularly strong in Italy, evoking memories of double-digit inflation from the 1970s and 1980s, including periods that exceeded 20%.

The surge in prices is mainly driven by the energy sector, with overall energy costs increasing from +17.1% to +22.3%. Within this sector, regulated energy costs rose from +18.6% to +25.9%, while unregulated energy costs increased from +17.0% to +22.2%. Food prices, including fresh fruits and vegetables, are also rising, with annual growth rates increasing from +3.8% to +5.5%.

Other services, such as recreational and cultural activities, and transport-related services, are also experiencing price increases, though at a slower pace.

Despite these rising costs, core inflation, which excludes energy and food prices, has only modestly increased from 1.5% to 1.7%. The gap between goods prices and services prices, however, has widened significantly. Goods prices accelerated from +4.1% to +5.4%, while services prices grew more modestly from +2.4% to +2.6%. This results in a difference of -2.8 percentage points between goods and services prices, up from -1.7 in August.

The overall Harmonised Index of Consumer Prices (HICP) shows a monthly change of +2.0%, with an annual rate of +4.1%. While fuel prices at the pump have slightly decreased, price lists remain a concern. The Ministry for Business and Made in Italy reports that major operators like Eni, IP, and Q8 are offering lower prices at their stations, at €1.99/l for petrol and €2.19/l for diesel, compared to the national average prices. This disparity in pricing is contributing to consumer caution and uncertainty about the future.