Budget, Istat: ‘Wage growth has stalled. Purchasing power down by 0.9 per cent’
In particular, in the private sector, the year-on-year trend in wages for the period April to August remains below inflation
Key points
‘In the second quarter of 2026, the disposable income of consumer households rose by 0.4 per cent compared with the previous quarter. The 1.7 per cent growth in consumption was thus accompanied by a reduction in the household savings rate, which fell by 1.2 percentage points during the quarter to stand at 6.7 per cent. Against the backdrop of a 1.4% increase in the implicit consumption deflator, household purchasing power fell by 0.9% quarter-on-quarter.”
Household spending remains stable
This was stated by Francesco Maria Chelli, President of Istat, during a hearing before the Budget Committees of the Chamber of Deputies and the Senate on the 2026 National Fiscal Programme. ‘The estimated average monthly expenditure of households resident in Italia stands at €2,782 in current values, essentially unchanged from the €2,755 recorded in 2024 (+1.0 per cent). 29.4 per cent of households reported having cut back on food expenditure compared with the previous year, reducing either the quantity or the quality of the products purchased; this percentage is down from 31.1 per cent in 2024. ‘Taking price trends into account, the ratio of the total equivalent expenditure of households in the bottom quintile to that of households in the top quintile stands at 5, a slight decrease from 5.1 in 2024,’ he added.
Wage recovery on hold
‘The current rise in inflation calls for particular attention to be paid to wage trends. In the second quarter of the year, the trend of nominal wages catching up with price growth – which had continued uninterrupted from the fourth quarter of 2023 to the first quarter of 2026 – came to a halt. In particular, in the private sector, the year-on-year trend in wages for the period April–August (the latest data available for wages) remains, albeit to a limited extent, below the rate of inflation.”
‘If tensions persist, GDP could fall by 0.2 per cent in 2027 and 0.4 per cent in 2028’
‘The Institute has carried out a further simulation exercise’ in addition to those already included in the Dpfp, ‘assuming a slower decline in the prices of the main energy commodities over the two-year period 2027–2028 due to persistent supply constraints. This would result in a greater and more prolonged impact on inflation and a more decisive monetary policy response. As a result of the continuing tensions – and concerns about rising government bond yields – it is also assumed that high levels of uncertainty amongst market participants will persist over the two-year period 2027–2028. The combined effect of these factors would result in a reduction in GDP growth of 0.2 percentage points in 2027 compared with the baseline scenario. The effect would be greater in 2028, when the reduction in growth would reach 0.4 per cent due to the propagation of the transmission effects of the shocks to the economy. In 2029, even in the absence of any further intensification of the assumed shocks, the impact on GDP would remain negative, amounting to 0.2 percentage points’. This was stated by Francesco Maria Chelli, President of Istat, during a hearing before the Budget Committees of the Chamber of Deputies and the Senate on the 2026 National Fiscal Programme (DPFP).
