New leap in inflation in Italy, as in the rest of Europe. According to preliminary estimates by Istat, in August the national consumer price index for the entire community (NIC), gross of tobacco, recorded an increase of 0,8% on a monthly basis and 8,4% on an annual basis (from +7,9% in the previous month), the highest since 1985. No better l'Eurozone, which did worse than expected in August, confirming the strong tensions on prices. According to Eurostat estimates, inflation in the EU stands at +9,1% in August, higher than the 9% expected and the 8,9% of the previous month. It is a new record which aligns with that achieved by the US in June (before declining slightly in July).
Skyrocketing inflation: driven by energy and food prices
As the institute explains, "it is the free market electricity and gas that produce the acceleration in the prices of unregulated energy goods (partly mitigated by the slowdown in fuel prices) and which, with processed food and durable goods , push inflation to a level not seen since December 1985 (when it was +8,8%)”. They speed up underlying inflation, i.e. net of energy and fresh food (+4,1% to +4,4% in August, it had not been the case since May 1996 when it was +4,7%) and that net of energy goods alone (from +4,7% to +4,9%, this has not been the case since April 1996).
Returning to the general index, the acceleration of inflation on an annual basis is mainly due on the one hand to prices of energy goods growing from +42,9% in July to +44,9%: those unregulated recorded the largest increase, going from +39,8% to +41,6%, while those regulated still show growth but stable (+47,9%). Also processed food goods have undergone a surge (from +9,5% to +10,5%) as well as i durable goods (from +3,3% to +3,9%). On the other hand, there was a slowdown in the prices of services relating to transport (from +8,9% to +8,4%).
Prices of goods accelerate, growth of services stable
On an annual basis, they accelerate i prices of goods (from +11,1% to +11,8%) while the growth of services (from +3,6% to +3,7%); The negative inflationary differential between the latter and the prices of goods widens (from -7,5 in July to -8,1 percentage points). On a monthly basis, however, the increase in the general index is mainly due to the prices of non-regulated energy goods (+3,0%), transport-related services (+2,4%, also due to seasonal factors) , processed food (+1,2%), durable goods (+0,8%) and recreational, cultural and personal care services (+0,7%, also due to seasonal factors). Furthermore, again according to preliminary estimates, the harmonized index of consumer prices (Ipca) increased by 0,8% on a monthly basis and by 9% on an annual basis (from +8,4% in the previous month).
Expensive energy and drought push shopping cart prices
The prices of the so-called are also running shopping cart. Food, home and personal care goods grew by 9,7% in August (from the previous +9,1%), an increase not seen since June 1984. On the other hand, products with a high frequency of purchase slowed down ( from +8,7% to +7,8%). According to Coldiretti, the dear energy , drought resulting in crop cuts, they pushed the prices of food and drink products to an overall average increase of +10,2%, which forced Italians to reduce purchases. The prices of fruit and vegetables increased on an annual basis by +9,7%, also due to speculation which underpays farmers for production and triples the prices of fruit and vegetables from farm to table. The result is an 11% cut in purchases in quantity compared to last year.
But the increase in costs also hits the entire agri-food chain hard, starting from the countryside, where there are even triple-digit surges for fertilizers (+ 170%), feed (+ 90%) and diesel (+ 129%).
The race in prices in Europe is also a record
Heavy numbers also for the Eurozone. Euro area annual inflation is expected to come in at 9,1% in August, again a new record, up from 8,9% in July. Looking at the main components of inflation, it is expected that energy will have the highest annual rate in August (38,3%, compared to 39,6% in July), followed by food, alcohol e tobacco (10,6%, compared to 9,8% in July), non-energy industrial goods (5,0%, compared to 4,5% in July) e services (3,8%, compared to 3,7% in July).
The surge in consumer prices increases the pressure on the European Central Bank in view of the governing council on 8 September when a decision will be new rate hike. In response to the European data, Joachim Nagel, head of the German Bundesbank, commented: “We need a vigorous rate hike in September. New steps must be expected in the coming months”.
