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Inflation and housing: impact on the Italian economy

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Housing costs drive inflation Inflation in Italy is rising again, significantly impacting consumers and the economy. In January, the inflation rate reached 1.5% year-on-year, up from 1.3% in December. The EU-harmonized index rose from 1.4% to 1.7%, reaching its highest level since October 2023.

One of the main drivers has been the increase in housing costs, including rent, electricity, water, and fuels, which rose by 2.4% in just one month. The food sector also saw a 1% increase, while entertainment and culture rose by 0.9%.

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Energy remains a key factor Although energy prices in Italy remain lower than in 2023 (-0.7%), the trend is shifting. In January alone, the sector recorded a 3.4% increase, with regulated tariffs surging by 14.5%. On a yearly basis, these tariffs rose by 27.8%, more than double the 12.7% recorded in December.

Core inflation, which excludes volatile components like energy and fresh food, remained stable at 1.8% annually, with a 0.2% monthly increase. The so-called shopping basket saw a 0.9% monthly rise and a 1.8% annual growth.

Comparison with the Eurozone and future outlook Across Europe, Eurozone inflation rose to 2.5% year-on-year in January, up from 2.4% in December. Core inflation, excluding energy, food, alcohol, and tobacco, remained steady at 2.7%.

According to Unimpresa Research Center, by 2025, Italy’s inflation rate will average 1.8%, aligning more closely with the Eurozone. However, the economic scenario may shift based on energy price trends, influenced by geopolitical factors and trade policies between the United States and the European Union.

Economic policies and the role of the ECB According to Giovanna Ferrara, president of Unimpresa, weak consumer demand could help reduce service prices in the coming months. Additionally, the European Central Bank has started a gradual interest rate reduction, potentially bringing the deposit rate down to 2% by June.

Unimpresa will continue to monitor price trends, identifying risks for families and businesses to ensure a balance between economic growth and financial stability.

What do you think about the current inflation trend? Share your thoughts in the comments!

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