Italy’s Economy Stalls as Inflation Hits 5.4%
Italy’s economic growth has stalled, while inflation surged to 5.4% in October, according to the latest data from the National Institute of Statistics (Istat), released on Friday, October 30. The country’s gross domestic product (GDP), adjusted for calendar effects and seasonally corrected, remained unchanged from the previous quarter, with a year-on-year growth rate of 0.8%.
The Istat report highlights a mixed economy. Growth in the services and agriculture sectors was offset by declines in industry. Domestic demand contributed positively, while foreign demand had a negative impact. The calendar-adjusted growth forecast for 2026 is 0.8%, with three more working days than in 2025. Notably, the third quarter of 2026 had four more working days than the previous quarter and one more than the same period in 2025.
Soaring energy prices, up 31.4% year-on-year, primarily drive inflation, influenced by the global geopolitical situation. Food prices, particularly unprocessed goods, which rose from 5.5% to 7.5%, and transport services, increasing from 1.6% to 3.1%, also contribute to inflationary pressure. The core inflation rate, excluding energy and fresh food, accelerated to 2.0%, while inflation excluding only energy rose to 2.5%.
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The cost of living crisis deepens as prices for essential goods, such as food, household, and personal care items, rose from 1.5% to 2.5%, and frequent purchases increased from 5.2% to 5.8%. Both regulated (+18.8%) and non-regulated (+4.9%) energy prices saw significant increases, along with unprocessed food (+1.8%), transport services (+1.2%), and processed food (+0.5%). In contrast, recreational, cultural, and personal care services experienced a 0.9% price drop.
The gap between the price growth of goods and services widened from -2.8 to -4.6 percentage points, with goods prices rising from 5.4% to 7.5% and services from 2.6% to 2.9%. Italy’s situation mirrors challenges faced by other European economies, where inflation persists despite efforts to curb it. The European Central Bank’s monetary policy decisions will significantly impact managing these economic challenges.
The Istat data reveals stagnant growth and rising inflation, with the inflation rate for 2026 acquired at +3.4% for the general index and +1.9% for core inflation. As Italy addresses these issues, the focus will be on policy responses to stabilize the economy and ease the burden on households, with future decisions expected to play a key role in handling these challenges.
