L’inflation in Italy to May remained stable according to the latest data released by Istat. The annual figure is 0.8%, with an increase of two tenths of a percentage point compared to April. The estimates of the statistical institute now agree with those of the European IPCA index, which however records a decline compared to 0.9% last month.
Italy remains among the European countries with the lowest inflation ever, on a par with Lithuania and with a figure higher only than that of Finland and Latvia. A positive situation but one that suggests some difficulties, revealed by the growth data which continues to signal an almost stagnant economy.
Inflation in Italy and comparison with Europe
L’Istat has released the first inflation estimates in Italy for the month of May. The data reveals a price increase of 0.8% compared to a year ago, two tenths of a percentage point more than in April. The parameter has been harmonized with those of the EU, through the HIPC index. So now the European and Italian surveys are in agreement, even if the community ones report a drop in the variation from the 0.9% recorded in April to the current 0.8%.
Inflation in our country has therefore returned entirely under control, after the peak of 2022 and 2023 due both to eenergy emergencywhich had hit Europe after the crisis in diplomatic relations with Russia, and to the blockade of global trade which had made the supply of various goods more complicated, consequently increasing their prices.
The Italian data on the increase in the costs of goods and services is among the lowest in Europe. Only the Latvia with +0.2% and the Finland with +0.5% they have lower inflation, while Lithuania presents the same trend as our country. On average, the EU has inflation around 2.6%rising compared to April: high figure but still under control.
Do prices in Italy grow too little?
The European inflation data is approaching the threshold that most economists consider to be a symptom of a healthy growing economy. 2% price increase, when it derives mainly from the demand for goods and services, it is desirable and any figure below often signals demand problems and therefore further issues to be resolved in the production system of the country under consideration.
Italy therefore has ainflation too low, but this does not mean that, without sustained economic growth, it is not desirable for this figure to start rising again. When you have high inflation but no economic growth we speak of stagflationa situation that is often difficult to resolve and in which consumers’ purchasing power is eroded very quickly by the combination of price growth and economic stagnation.
In Italy, GDP has returned to the minimum growth trajectories prior to the pandemic. In the first quarter, Istat recorded an increase in gross domestic product of 0.3%, insufficient to support inflation higher than the current one. The statistics institute’s estimates are also lower than those of the Government regarding the annual trend growth. Wages also remain low and without significant growth, another factor limits spending possibilities.
