According to the recent indications disclosed in the Economic Bulletin, the Bank of Italy forecasts an acceleration of the fall in inflation in the coming two years. However, the forecast has balanced risks.
The central institute’s estimates show HICP inflation at 6% for the current year, with a marked slowdown to 2.3% in 2024 and 2% in 2025. This downward trend is mainly attributable to the sharp decline in import prices, caused largely by the reduction in the cost of energy raw materials.
Despite the general decline, inflation excluding food and energy is expected to remain high in 2023, averaging 4.5%. This is mainly driven by the gradual pass-through of past increases in energy prices, but is expected to ease over the next two years, to 2.4% in 2024 and 2.0% in 2025. Domestic inflation, measured with the GDP, should exceed 5% in 2023, to then return to around 3% on average in the following two years, mainly due to the acceleration in unit labor costs.