The domestic economy of Italy is undergoing a severe crisis as inflation is showing no signs of respite. According to the latest consumer price index data released by ISTAT on Friday, the EU-harmonised consumer price index (HICP) in Italy jumped to an all-time high of 12.8 percent on year to year basis.
The CPI number released on Friday is the highest since the inception of the series in 1998. In September 2022, the consumer price index was standing at 9.4 percent.
A survey by Reuters News Agency had earlier predicted a 9.9 percent Consumer Price Index rate in October 2022. The latest data exceeded the expectations of market analysts.
High inflation in the economy and the ever-increasing consumer price index shows the extreme crisis undergone by the Italian economy. The energy crisis suffered by the European Union due to the Russian special military operation in Ukraine and the resultant increase in prices of energy commodities has had a severe impact on European economies. Even though many were thinking Germany had the worst economic crisis, the recent trends and economic data signal that Italy is facing a much worse crisis which is coupled with political volatility which existed till a few weeks ago.
According to data released by ISTAT, inflation of Energy commodities increased to 73.2 percent from 44.5 percent in September. Core Inflation also jumped from 5.3 percent to 5.7 percent.
The new government under Prime Minister Giorgia Meloni will have to take calculated economic measures in order to shield Italian citizens from more economic hardships while at the same time safeguarding the economic condition of the country.
Various economists and market analysts demand that the newly established government in Italy should direct the governmental help to poor families instead of the general population. They are of the opinion that the government should be willing to take up a major portion of the energy bills of these poor families in order to let them save money for their day to day activities.
Economic research firm ING Think stated that it was too early to predict the maximum inflation rate as conditions are highly volatile. The think tank also stated that the inflationary pressure will continue to exist for a few more months and the Italian government will be forced to intervene with economic packages.
Market analysts are waiting to see how the new government under Prime Minister Meloni will tackle the issue of high inflation with the scarce resources it has in hand.