Italy faces 3.2 percent inflation as growth slows to 0.9 percent

Italy's GDP grew 0.2 percent in the second quarter, supported by consumption and investment; activity slowed slightly over the summer.

October forecasts put growth at 0.9 percent in 2026, 0.7 percent in 2027 and 0.8 percent in 2028.

Inflation projections are 3.2, 2.4 and 1.7 percent respectively, with core inflation near 2 percent.

Energy tariffs remain below 2021-22 peaks.

The current account surplus approached zero as the energy balance deteriorated.

The Government's October 2 plan puts the deficit at 2.9 percent of GDP in 2026 and 3.4 percent in 2027, with debt reaching 138.5 percent before declining.

It intends to activate the national escape clause for energy security and defence spending in 2027-28. Employment grew in spring; wage growth slowed.

In September, the European Central Bank (ECB) raised rates by 25 basis points, taking its deposit facility rate to 2.5 percent.

Inflation remains above its 2 percent target.

The Federal Reserve and Bank of Japan also raised rates by 25 basis points; the Bank of England held steady and the People's Bank of China remained accommodative.

Euro-area spring GDP rose 0.3 percent excluding Ireland.

ECB forecasts put 2026 growth at 0.9 percent and inflation at 3.0 percent.

Firms' borrowing costs rose about 25 basis points since hostilities began, while corporate lending strengthened.