Italy's inflation nears 4 decades high

ROME — Italian inflation surged to a new record high in October, data showed on Friday, underscoring the economic challenges facing new Prime Minister Giorgia Meloni and increasing the risk of a further rise in the eurozone as a whole.

Italy's EU-harmonized consumer price index, or HICP, jumped a preliminary 12.8 percent year-on-year, the highest level since the series began in 1996, from 9.4 percent in September, the Italian National Institute of Statistics, or ISTAT, reported.

Energy price inflation surged to 73.2 percent from 44.5 percent the month before, ISTAT reported, while core inflation — net of energy and fresh food — climbed to 5.7 percent from 5.3 percent.

"Inflation at this level is one of the immense economic problems for the new government, which only has limited resources to tackle them because of the huge public debt," said Lorenzo Codogno, head of LC Macro Advisors and a former chief economist at the Italian Treasury.

"Looking ahead, conditions don't seem to be there yet to call the inflation peak," ING Bank said in a note to clients, citing pipeline pressures evident in producer price data for September. "What we will likely see is more volatility in headline numbers over the next few months."

The sky-high inflation around the eurozone led the European Central Bank to hike its deposit rate on Thursday for the third time since July, but prices now seem to be rising faster in Italy than in most of its eurozone neighbors.

Inflation in Germany climbed to 11.6 percent in October from 10.9 percent the month before. France jumped to 7.1 percent from 6.2 percent, while in Spain it eased to 7.3 percent from 9 percent.

Data for the 19-nation currency bloc will be released on Monday. On Friday, the ECB's Survey of Professional Forecasters, a key input in policy deliberations, showed eurozone inflation will be higher than feared for years to come and could stay above the bank's 2 percent target indefinitely.

The share of income that Italians were able to save between March and August fell by 78 percent compared with the first two months of the year, research by online bank N26 showed, a much sharper drop than seen in Germany, France, or Spain.

Agencies - Xinhua