Italy Inflation Rate: Data, Forecast & Trends

As of April 2025, the Harmonised Index of Consumer Prices (HICP) for Italy registered a year-on-year increase of 2.0%. This marked a slight deceleration from the 2.1% recorded in March 2025, bringing headline inflation precisely to the European Central Bank's (ECB) medium-term target. This achievement follows a period of significant disinflation from the multi-decade highs seen in late 2022, signalling a return to a more stable price environment, though the journey has been anything but smooth.

A granular look at the year-on-year changes in HICP components for April 2025 reveals the diverse forces at play:

• Goods: The inflation rate for goods stood at +1.0%, a decrease from +1.5% in March. This indicates a continued easing of price pressures for tangible products, likely reflecting normalised supply chains and moderating global commodity prices (excluding some food categories).
• Services: In contrast, services inflation accelerated to +3.0% from +2.5% in March. This is a critical figure, suggesting that domestic inflationary pressures, particularly those linked to wages and demand in service-oriented sectors, remain more persistent. The widening gap between goods and services inflation (now +2.0 percentage points) is a noteworthy trend.
• Food:
• Grocery and unprocessed food: Showed an annual increase of +2.6%, up from +2.1% in March.
• Unprocessed food: Accelerated to +4.2% from +3.3%.
• Processed food including alcohol: Rose to +2.2% from +1.9%.These figures highlight that food inflation remains a significant contributor to the overall cost of living, with both raw and processed food items seeing renewed upward pressure.
• Energy: The energy component presented a mixed but overall complex picture:
• Non-regulated energy products: Prices fell by -3.4% year-on-year, a significant slowdown in price growth compared to +0.7% in March, exerting a deflationary pressure.
• Regulated energy products: Conversely, these prices surged by +31.7% year-on-year, accelerating from an already high +27.2% in March. This component is often influenced by government interventions, base effects, and wholesale market pass-through with a lag.
• Other notable items:
• Services related to transport: Saw a sharp acceleration in prices, up by +4.4% compared to +1.6% in March, likely influenced by fuel price trends and seasonal demand.
• Tobacco: Inflation moderated to +3.4% from +4.6%.

The divergence is clear: while non-regulated energy and overall goods inflation are relatively subdued or negative, regulated energy, food, and particularly services continue to drive inflation upwards.

Examining the month-on-month dynamics, the Italian HICP rose by +0.4% in April 2025 compared to March 2025. Istat (the Italian National Institute of Statistics) noted that this HICP increase was primarily influenced by the end of winter sales for clothing and footwear, items which have a specific seasonal pattern in their pricing.

The national CPI, which has slightly different coverage and weighting, showed a smaller month-on-month increase of +0.1%. The main contributors to this monthly change were:

• Increases:
• Services related to transport: +3.4% (partly seasonal)
• Services related to recreation, including repair and personal care: +1.8% (partly seasonal)
• Unprocessed food: +0.7%
• Processed food including alcohol: +0.5%
• Services related to housing: +0.3%
• Decreases:
• Regulated energy products: -6.9%
• Non-regulated energy products: -5.8%
• Durable goods: -0.3%

Italy's average Harmonized Index of Consumer Prices (HICP) inflation for 2024 significantly moderated, registering at approximately 1.1%. This marked a sharp decrease from the 5.9% observed in 2023, bringing the country's inflation rate well below the European Central Bank's 2% target.

The substantial deceleration was primarily driven by a sharp decline in energy prices, which had been a major inflationary force in previous years. While overall price growth eased, food prices showed more persistence, albeit at a reduced pace compared to 2023. Core inflation, which excludes volatile energy and unprocessed food items, also eased but remained slightly higher than the headline figure, suggesting that underlying price pressures, particularly in the services sector, continued to be a factor. This notable disinflation provided a more favorable economic environment for Italian households and businesses.

Over the past thirty years (circa 1995-2025), Italy's inflation experience has been varied. Prior to adopting the Euro, Italy often had higher inflation than its northern European counterparts. The period after Euro adoption (from 1999) brought greater price stability.

The economic landscape shifted dramatically from 2021. The post-pandemic recovery, coupled with severe global supply chain disruptions and, crucially, the surge in energy prices following Russia's invasion of Ukraine, propelled Italian HICP inflation to unprecedented levels in recent history. It reached an all-time high of 12.60% in October 2022. The average HICP for 2022 was 8.7%, followed by 5.9% in 2023. Since these peaks, a significant disinflationary process has taken hold, leading to the current 2.0% rate, although the path has been marked by fluctuating energy prices and persistent service sector inflation.

Core inflation, which excludes volatile items like energy and unprocessed food, provides insights into underlying, more persistent price pressures. In April 2025, Italy's core HICP inflation stood at +2.1%, an increase from +1.7% in March. Inflation excluding only energy also rose, to +2.2% from +1.8%.

Currently, core inflation (2.1%) is slightly above headline inflation (2.0%). The fact that core inflation has ticked up suggests that domestic price pressures, particularly within the services sector (which is a large component of core inflation), are proving somewhat stubborn. This stickiness in core inflation is a key area of focus for the ECB, as it indicates that inflationary pressures are not solely confined to volatile commodity prices but have broader roots in the economy, including wage dynamics and demand-side factors.

Several interconnected risks cast uncertainty on Italy's future inflation path:

• Geopolitical Instability and Energy Markets: The ongoing conflicts, notably in Ukraine and the Middle East, present a continued upside risk to energy prices. Any renewed surge in oil, gas, or other commodity prices due to supply disruptions or heightened tensions would directly impact headline inflation and could filter through to core components. Furthermore, the scheduled introduction of the EU's Emission Trading System 2 (ETS2) in 2027 is anticipated to exert temporary upward pressure on energy prices.
• Global Trade Fragmentation and Protectionism: Italy's significant export sector is vulnerable to escalating trade tensions and protectionist measures. Proposed tariff hikes by major economies like the United States could dampen external demand, potentially leading to lower growth and complex inflation effects (e.g., higher import costs from retaliatory tariffs).
• Domestic Wage Pressures and Services Inflation: While some forecasts anticipate moderating wage growth, the labor market's evolution remains crucial. Sustained strong wage settlements, potentially driven by workers seeking to recoup purchasing power lost during the high inflation period, could keep services inflation (currently at 3.0% year-on-year) elevated. This is a primary channel for second-round effects.
• Stickiness of Core Inflation: The recent increase in the core inflation rate to 2.1% warrants close attention. If underlying inflation, driven by services and resilient domestic demand, proves more entrenched than expected, it could complicate efforts to keep headline inflation sustainably at the 2% target.
• Fiscal Policy and Public Debt: Italy's high public debt-to-GDP ratio remains a structural vulnerability. While current fiscal plans aim for deficit reduction in line with EU rules, unexpected economic shocks or changes in fiscal stance could impact investor confidence, borrowing costs, and indirectly, inflation dynamics through aggregate demand. The phasing out of costly initiatives like the "Superbonus" for housing renovation will have fiscal and sectoral impacts, while expenditure under Italy's Recovery and Resilience Plan (RRF) is expected to support investment.
• Global Economic Growth Slowdown: A more pronounced slowdown in the global economy than currently projected, or in key trading partner economies, would inevitably impact Italy's growth prospects. While this would likely exert downward pressure on inflation through weaker demand, it would also pose challenges for employment and fiscal sustainability.
• Climate-Related Shocks: Increasingly frequent and severe weather events linked to climate change can disrupt agricultural production and supply chains, leading to renewed volatility in food prices, which have recently shown an acceleration

Italy Inflation Data