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Italy’s purchasing power halved since start of Russia-Ukraine crisis

Rome, Italy | Xinhua | Purchasing power in Italy fell by 54 percent over the last year, as high inflation, reduced trade and slower economic growth caused in part by the Russia-Ukraine crisis took their toll on the daily life of Italians, according to a new report published by Italian think-tank Nomisma on Monday.

The report, titled Changing World Observatory, did not cover data from any other European countries.

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, the report said. Including January (the most recent month for which data is available), prices increased by double digits year-on-year for each of the last four months.

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.

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