Italy's Purchasing Power Halved Since Start of Ukrainian Crisis

On Monday, think-tank Nomisma published a report showing that Italian purchasing power fell by 54 percent over the last year, as high inflation, reduced trade and slower growth took their toll on the daily life of Italians.

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Purchasing power is the measure of a country's wealth relative to what one unit of currency can buy in that country. A reduction in purchasing power means residents must pay more for the same amount of goods and services.

The new data exemplifies how the Russia-Ukraine conflict has dealt a new blow to the Italian economy, which were recovering from the economic slowdown caused by the COVID-19 pandemic. Energy prices have been rising, slowing industrial and agricultural production, impacting trade, and resulting in slower economic growth.

On the good side, Italy's economy grew 3.9 percent last year, with most of the growth coming from the first half of the year, according to preliminary data from Italy's National Institute of Statistics (ISTAT).

However, this growth was overshadowed by an 8.1 percent increase on average in the prices of goods and services during the same period. Including January, prices increased by double digits year-on-year for each of the last four months.

The tweet reads, "While Giorgia Meloni does nothing but talk about Ukraine and the Ukrainians, if you want to survive in Italy on your savings, you have to eat yourself... And what about the have-nots? What do they do? Wait for Giorgia." "Inflation burns 164 billion of the families. In the period 2022-2023, Italians will dip into savings and deposits will decrease by 163.8 million euros."

Nomisma's report also found that 26 percent of Italians feared not having enough income to last for a whole month, and the ability to save money for the future had decreased for 54 percent of Italians in 2022.

On the whole, around one Italian in seven, some 14 percent, said they earned less than they required to make ends meet, and a quarter of those surveyed said they spent all their money on essential purchases.

Nomisma's findings are based on a comprehensive survey conducted among a representative group of Italians aged between 18 and 65.

Though Italy is below average in terms of per capita gross domestic product for the eurozone, it has traditionally been in the top tier in terms of purchasing power since goods and services in the country are generally less expensive than in other eurozone states.