A recent report by the General Confederation of Italian Industry (Confindustria) has revealed that soaring inflation in Italy is causing households to cut back on spending on food. The report highlights a “sharp decline” in household spending on groceries, with a drop of 3.7% in 2022 and a significant decrease of 8.7% in the fourth quarter of 2022 compared to the first quarter of 2021.
According to Confindustria, this decline in food spending has become a burden on overall consumption, as food expenses account for 14% of all household expenses, second only to spending on housing, water, and energy, which accounts for 23% of expenses. The head of the National Consumer Union (UNC), Massimiliano Dona, has described the report as “alarming” and has claimed that Italians are being forced to go on a diet due to the skyrocketing inflation.
Dona further explains that the situation has a serious negative impact on economic growth since consumption represents 60% of GDP. If Italians are not buying, then merchants are not selling, and businesses are not producing. This highlights the interconnectedness of consumer spending and its influence on the overall economy.
Experts from the UNC have also noted that this trend of cutting back on food purchases in Italy emerged during the pandemic. In January 2023, it was found that purchases had decreased by 4.4% in physical terms compared to the previous year and by 6.3% compared to the same month in 2021.
The consequences of the decrease in food spending are two-fold. Firstly, it highlights the financial constraints faced by Italian households due to rising prices and inflation. Secondly, it reflects the impact on economic growth and the potential for a slowdown in various sectors as a result of reduced consumer demand.
The findings of this report emphasize the need for measures to address inflation and provide relief for households that are facing increasing financial burdens. Without interventions to mitigate inflation and support consumer purchasing power, the negative impacts on both individual households and the wider economy are likely to persist.
In conclusion, the report by Confindustria reveals that Italian households are curbing spending on food due to soaring inflation. The decline in food spending is a burden on overall consumption, affecting economic growth and various sectors. These findings highlight the need for action to address inflation and support households facing financial pressures.