Inflation and counter-inflationary policy measures: The case of Italy

Italian inflation has risen to 9.4% in September 2022. Energy goods have been the primary driver of the inflation surge since the fall of 2021, but price increases are now spreading to the whole economy, with 'core' inflation at 5.3%. Since Italy's industries heavily rely on gas as an energy source, many energy-intensive sectors experienced greater producer price increases. The gap between nominal wages and inflation have started to widen; in the first nine months of 2022 real wages lost 6.6 percentage points. Inflationary pressures affect Italian households unevenly; price increases have a much higher impact on the poorest groups of the population, due to their large share of expenditures on energy and food. From the end of 2021 to November 2022, the Italian government spent 62.8 billion euros on measures compensating firms and households for the surge in prices caused by inflation. The resources amount to 0,3% of the Italian GDP in 2021 and 3% in 2022. These measures benefited households to the tune of 16.9 billion euros, firms 23.5 billion, while 22.4 billion went to supporting the overall economy. Mario Draghi's government measures mainly focused on tax credits, social and energy bonuses, along with reductions in excise taxes and VAT on electricity and gas. The right-wing government led by Giorgia Meloni elected in September 2022 has generally extended previous measures.