Italy's Giorgetti blames Middle East war for 5.6% inflation as growth stalls

The finance minister said Rome will take the energy-price complaint to allies, on a day when third-quarter output failed to grow and unions called for a national strike over household budgets.

Italy's finance minister has pinned the country's 5.6% October inflation on the Middle East war and said Giorgia Meloni's government will press the point with allies abroad. Giancarlo Giorgetti, speaking to journalists in Rome, called the link between warfare and energy prices a legitimate worry and described the price rise as a painful result of it.

The figures gave him little else to point to. Consumer prices came in well above what economists had forecast, and output did not grow in the third quarter, when expectations were for expansion. Energy costs tied to the Iran conflict appear to be driving the jump, which would leave Italy far ahead of the other large eurozone economies on inflation. Unions have responded by pushing for a nationwide strike over the squeeze on household budgets.

The timing is awkward for Meloni. Her cabinet has just finalised its last budget before next year's elections, built mainly around tax relief for middle-income earners and help with living costs, including lighter tax on salary bonuses for younger workers and lower rates on rent-controlled leases for under-35s. Earlier this month, demonstrations drawn mostly from younger Italians, some of them violent, led her to tighten enforcement of public order.

The argument is as much about the budget as about oil. Because the inflation is blamed on imported energy costs rather than domestic drivers, Rome can claim it is a victim, and Italy has already argued before the EU that inflation should justify budget flexibility. But appealing to allies adds a political track to the Hormuz standoff without changing the diplomatic or Gulf supply picture that sets crude's risk premium. Nor has fiscal stress on the eurozone periphery lately fed through to Treasurys. Whatever Rome gets from its partners, the price pressure will ease only when energy does.