Italian Households Recover Purchasing Power by 2025, BDI Study Shows
A Banca d'Italia study reveals that Italian households are projected to recover their purchasing power by 2025, offsetting losses from the energy crisis's inflationary shock. This recovery is largely attributed to discretionary budgetary policies that more than compensated for fiscal drag and benefit erosion.
Discretionary Policies Drive Income Recovery
A recent study by Banca d'Italia, titled 'Fiscal drag, discretionary policy measures and the purchasing power of Italian households in 2022-2025', estimates the factors influencing changes in Italian households' disposable income from 2021 to 2025. Utilizing the bank's microsimulation model, BIMic, the analysis identifies key contributions: the adjustment of nominal incomes to inflation, fiscal drag and benefit erosion, real growth driven by higher employment, and discretionary budgetary policies.
The study emphasizes the significant role of these discretionary policies, which were instrumental in shaping the financial landscape for Italian families during this period.
Inflationary Shock Overcome by 2025
The study's findings indicate that by 2025, Italian households had, on average, successfully recovered the purchasing power eroded by the inflationary shock from the energy crisis.
This rebound was largely facilitated by the strategic implementation of discretionary policies.
These measures proved effective in more than offsetting the combined negative effects of fiscal drag and the erosion of benefits, which had previously constrained household incomes.
The analysis underscores a critical turning point where targeted governmental interventions provided substantial relief and support to the financial well-being of Italian families.
Uneven Recovery Across Income Brackets
The study reveals a nuanced recovery, not uniformly distributed across income brackets.
Middle-income households saw their disposable income grow slightly faster than inflation, suggesting a relative gain in purchasing power.
However, the top quintile lagged, and the bottom quintile merely kept pace, highlighting persistent disparities in economic outcomes.