Moving from income flows to the stock of assets, price increases mean that the holders of financial wealth face the erosion of the nominal value of stocks and bonds. Labour conflicts over the protection of real wages may result from these tensions. Moreover, an increasing number of workers – including many in temporary and part-time employment – are not covered by collective contracts and have few prospects to recover their losses in real wages. Conversely, employees’ real wages are seriously eroded by price increases automatic adjustments of wages to prices have a modest relevance and a recovery of real wages can only come from demands in collective wage contracts these, however, face a strong resistance by firms. Self-employed workers may have some opportunity to increase the price of the services they provide, depending on their market power. Moreover, individuals have little ability to respond to inflation. Poorer households devote a greater share of their incomes to energy and food, and are hit hardest by price increases. Individuals are exposed in different ways to the effects of inflation. In the longer term, firms may respond to the inflationary shock with investment in new technologies and organisations that reduce the monetary cost of energy and other expensive imported inputs, or that expand the value of exports relative to imports, leading to a recovery in efficiency and competitiveness. Without public control of energy markets, the industry has obtained large excess profits firms in oligopolistic markets and with some degree of market power have increased their prices to compensate for more costly inputs firms unable to raise prices have experienced a squeeze in profit margins. This process of redistribution is shaped by power asymmetries among economic actors and by public policies regulating energy prices, the operation of markets and the redistribution of incomes. We have to understand the inflationary shock as a transfer of real income from the domestic economy to energy-supplier countries, and – internally – from the economic actors operating with unchanged prices and incomes to the industries, firms and individuals in a position to increase them. Starting in late 2021 with a major rise in imported energy prices, inflation then spread to producer prices and set in motion a process of readjustment in the economy as a whole. The average annual growth of the Harmonised Index of Consumers Prices (HICP) in Italy reached 8.7% (compared to 1.9% in 2021), and the monthly change over the previous year reached 12.3% in November 2022.
In 2022, the return of inflation drastically changed the economic landscape in Italy as well as the rest of Europe.
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