Food, energy prices drag Italy toward record inflation

Food and energy prices are dragging Italy toward a record 6.8% inflation rate, the highest level since joining the common Euro currency in 1999.

The prices of fish, wheat, electricity and fuel are rising as a result of increasing costs across all sectors of the production and distribution chain.

The inflation rate is becoming a concrete challenge at the stalls of the Testaccio food market, where pensioners are having to be very careful in deciding what to put in their shopping bags.

Marco Aureli, farmer and owner of a fruit and vegetable stall, said he still manages to balance the increased prices of raw materials as he produces in-house the fruit he sells.

But he complained about the increase of the cost of plastic he uses for his greenhouses and also for biodegradable shopping bags.

These increased costs have forced him to hike prices.

"Obviously we had to increase the price a little bit. I work from 12 to 15 hours a day, I must have some profits otherwise I have to shut down the whole activity and go away," Aureli said.

According to EUROSTAT,  in the four main economies of the Euro area, prices reached record figures in March: 7.6% in Germany, 5.1% in France, 6.8% in Italy and 9.8% in Spain.

According to the Italian institute of statistics (ISTAT) in April, Italy registered 6.2% compared with the same month in 2021.

The sectors that are towing the prices up are still food, electricity, fuel and transportation.

The U.S. also saw consumer prices jump 8.3% in April from a year ago, remaining close to a four-decade high.

Increased fuel prices have a cross-sectional effect on all economic sectors, including the fishing industry, where boats need large amounts of diesel and most fish supplies are imported and transported on trucks.

"I used to pay salmon, that arrives either from Scotland or Norway, between 9 and 10 euros per kilogram, now it reached 15.90 euros," explained Simona Proietti, owner of a fish stall at the Testaccio market.

The Italian government is enforcing various inflation mitigation measures, such as fuel price cuts, social bonuses and tax credits, to help both businesses and low fixed income households.

The measures approved by the government led by Prime Minister Mario Draghi are helping in absorbing the price shock, but customers at the Testaccio market are starting being more careful about picking pricey food, especially fish.

According to Antonio Pinto, representative of the Italian consumers lobby, Confconsumatori, sales of fresh fish in supermarkets decreased by 18 percent in March compared to the same period in 2021.

Pinto said consumption of items such as meat and cheese had decreased while pasta and canned meat sales had increased.

"This proves that basically the post-pandemic, the war, but also the increase in prices, means that the shopping trolley basically becomes more sober, because the focus is evidently on low-cost food," Pinto said.

Pinto believes that only structural reforms on taxes, job training and unemployment can provide an answer to soaring inflation.

Many analysts are also maintaining that the current inflation will not be just a temporary blaze that will soon pass.

"I believe that there is a concrete risk that inflation may have further increases," said Nicola Borri, professor of economic policy at Luiss Rome university.

Image: AP