Ukrainian crisis, inflation weighs on the Italian economy (ISTAT)

ROME, July 11 (Xinhua) — The ongoing crisis in Ukraine continues to weigh negatively on Italy’s economic situation, the country’s main statistical entity reported on Monday.

The National Institute of Statistics (ISTAT) said in its monthly economic trends update that there was “high uncertainty related to the conflict between Russia and Ukraine” combined with inflationary pressures and a change monetary policy in the euro area.

The crisis in Ukraine is seen as contributing to triggering a worsening energy crisis which has had repercussions on other sectors of the economy, including industrial production and transport.

The institute also noted announcements from the European Central Bank that it intended to raise interest rates this month and in September and to at least temporarily suspend its economic support for domestic bond sales.

ISTAT said its seasonally adjusted index of the post-pandemic recovery phase of industrial production that began in January was “paused” in May, although it still remained above levels of 2021.

Household confidence was “deteriorating” due to consumer behavior in a weakening labor market, he said.

The rise in costs in June showed “a further widespread acceleration in all components”, ISTAT said, noting that while the difference between the inflation rate in Italy and the average for the euro zone as a whole was decreasing, it remained negative.

“Growth prospects for the coming months seem to be negatively affected by the continuation of the inflation phase, the deterioration of the trade balance and the drop in household confidence,” said ISTAT.

In an optimistic note, however, the institute said the business climate continued to improve, with retail sales up 1.9% in value and 1.5% in volume in May compared to april.

Christi C. Elwood