High inflation and high costs mean that Italians’ spending continues to decline; if the current trend continues, it will fall by another 3.7 billion euros in the second half of the year, the association of Italian entrepreneurs Confesercenti said on Saturday.
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“The high cost of living is slowing down consumption. Declining purchasing power and savings are beginning to affect family spending, which, if this trend does not change, should fall by 3.7 billion in the second half of the year compared to the first six months of this year,” a report commissioned by the association from the European Research Centre says.
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Experts cite “a long period of high inflation, which has reduced the purchasing power of Italians,” as the main reasons for the negative situation in consumption. At the same time, they point out that at the first stage, citizens, in order to maintain the same level of consumption, were forced to use their savings, which, however, have decreased noticeably over the past two years of constant price growth.
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At the same time, the report’s authors note that the policy of increasing interest rates pursued by the European Central Bank in order to curb inflation also negatively affects the purchasing power of many families, especially those who have taken out mortgage loans.
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“In addition, the increase in interest rates occurs against the backdrop of a rapidly deteriorating economic situation. The factors that contributed to the recovery from the pandemic are being exhausted, while the impulses associated with exports and investments, the contribution of which to GDP growth is declining, are greatly weakened,” experts point out.
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At the same time, they emphasize that changes in Italy’s gross domestic product will depend on the dynamics of final consumption, the share of expenditures on which in GDP should decrease this year to 59.3%. This is the lowest figure since 2000.
