Inflation and populism: a familiar story

Inflation is rising. According to preliminary estimates from Istat, the national consumer price index (NIC) rose by 4.2 per cent year-on-year in September. This is the highest rate in three years, exactly since September 2023, when inflation reached 5.3 per cent. This means that the implied inflation rate for 2026 – assuming prices do not rise for the rest of the year (which is highly unlikely) – stands at 3.1 per cent. This figure is well above the estimates from a few months ago. The thing about inflation is that when it falls, the government takes the credit, as happened in 2023 when Ministers Tajani and Urso vied with one another to claim credit for slowing the rise in prices. Whereas when it rises, the opposition blames the government, as the PD, M5S and AVS have been doing for some time, accusing the government of doing nothing to curb rising prices and of failing to follow the example of countries that are keeping energy costs in check, such as Spain.

The reality, however, is that in both cases, the government is neither to be credited nor blamed. The rise in prices is the result of an exogenous shock, such as the energy crisis, and bringing inflation down to its ‘natural’ target is a task that falls to the ECB. It is no coincidence that inflation is rising across all European countries and for the same reason: the rise in energy prices, due to well-known geopolitical causes. Spain, held up as an unlikely example of energy price control, has the highest inflation rate in the eurozone: in September it rose to 4.9 per cent (5 per cent if the HICP is taken into account, which stands at 4.1 per cent in Italy), driven precisely by the rise in energy prices (+21.6 per cent). What the inflation figures actually tell us is that, within the ECB, the position of those on the Governing Council calling for a rate rise as early as October will be strengthened. But there is no doubt that, in this election year, all political forces – both in government and in opposition – will be united in their protest against the ECB’s monetary ‘tightening’. Even if it is the tool needed to curb inflation.