Italy: Inflation comes in at highest level since August 1995 in February
Consumer prices increased 0.92% in February over the previous month, after the 1.59% increase recorded in January. The result was driven by moderating price pressures for food and non-alcoholic beverages and easing price pressures for recreation and culture. Moreover, prices for utilities grew at a more subdued pace.
Inflation came in at 5.7% in February, up from January’s 4.8%. February’s reading marked the highest inflation rate since August 1995. Meanwhile, the trend pointed up, with annual average inflation coming in at 5.7% in February (January: 2.2%). Finally, harmonized inflation rose to 6.2% in February, from the previous month’s 5.1%.
On the outlook, Paolo Pizzoli, senior economist for Italy and Greece at ING, commented:
“Given the most recent developments in energy prices following the invasion of Ukraine, some extra pressure might be in the pipeline for regulated energy prices starting in April, which will be attenuated by the compensating measures already approved by the government. We suspect that headline inflation might remain above the 5% threshold throughout 1H22, with the core measure slowly inching up.”
As to the possible use of alternative sources of energy, he added:
“The Italian government is now considering new short-term measures to attenuate Italy’s vulnerability to an unfavorable energy mix and the over-dependence on Russian gas (40% of Italian gas imports come from Russia). It is reportedly exploring the possibility of increasing gas import volumes from Algeria and is considering temporarily reviving up the use of coal for electricity generation, which was being phased out under the greening strategy.”