The annual inflation rate in Italy rose to 1.5% in January 2025, up from 1.3% in the previous two months, in line with preliminary estimates.
Italy inflation rate confirmed at 15-month high
This marked the sharpest increase in consumer prices since October 2023, largely driven by a significant rise in regulated energy costs, which surged by 27.5% compared to 12.7% in December. This jump in energy prices was a result of higher power prices across several European countries, which were exacerbated by the ongoing halt in Russian gas supplies to Europe. The energy crunch led to a spike in liquefied natural gas (LNG) prices, further adding to inflationary pressures.
Details of annual changes
At the same time, the decline in non-regulated energy prices moderated, falling by 3% compared to a larger drop of 4.2% in December. While the reduction in fuel and other energy costs slowed, it did not fully offset the impact of the surge in regulated energy prices.
Additionally, prices for recreational, cultural, and personal care services rose at a faster pace of 3.3% compared to 3.1% in the previous month. However, this was partially offset by a slower increase in transport-related service costs, which rose by 2.5% in January, down from a 3.6% increase in December. The easing in transport costs provided some relief amidst the broader inflationary trend, though it did little to alleviate the overall impact of higher energy prices.
Core inflation remains stable
Meanwhile, annual core inflation, which excludes volatile items such as energy and food, remained stable at 1.8% in January, suggesting that underlying price pressures remained relatively contained despite the energy price surge. On a monthly basis, the Consumer Price Index (CPI) jumped by 0.6%, marking the largest increase since October 2022 and accelerating from a modest 0.1% rise in December. This sharp uptick in the monthly CPI underscored the extent of inflationary pressures in the economy, driven primarily by energy costs but also reflecting some broader price increases.
Looking ahead, inflationary concerns remain a key issue for Italy and the broader Eurozone, as policymakers continue to face challenges from fluctuating energy prices, geopolitical uncertainties, and ongoing supply chain disruptions. The rise in energy costs will likely continue to weigh on the cost of living, putting pressure on consumer spending and the overall economic recovery.
