Italian inflation surges past 5 percent as war reaches the shelves, October reading jumps to 5.4 from 4.2 percent on energy food and transport, Unilever and Reckitt lift prices while UK growth forecast is cut to 1 percent

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Italy inflation surges to 5.4% in October as energy costs bite euronews.com

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Italian inflation jumped to 5.4 percent in October, up from 4.2 percent in September and far above the European Central Bank's 2 percent target, the national statistics agency Istat said on Friday. Energy, food and transport prices did the pushing.

The shock is no longer confined to wholesale energy. Unilever said its prices "stepped up" in the third quarter in response to soaring commodity costs: underlying sales grew 5.2 percent, of which 2.3 points came from price alone. Reckitt Benckiser raised prices 4 percent across Europe over the same period. Demand is holding — Unilever raised its volume outlook, now expecting growth of at least 3 percent for the year — so the makers of soap and deodorant are passing the war's commodity bill to supermarket shelves and finding customers still there.

Governments are marking the same arithmetic down. Britain's Office for Budget Responsibility cut next year's growth forecast to 1 percent from 1.6 percent, with Chancellor John Healey citing "global economic storms" linked to the Iran war; the UK's fiscal headroom shrank to £15 billion from a previously predicted £26 billion after a £14 billion jump in debt interest costs.

The eurozone grew 0.4 percent in the third quarter — 0.2 percent once Ireland's 5.5 percent is stripped out — but the composition is uneven: Germany expanded 0.2 percent, Spain 0.6, France contracted 0.1 and Italy stood still. ING's Bert Colijn said the economy "seems to have shrugged off the Middle East crisis," helped by defence and infrastructure spending, but warned that steadily rising energy costs mean an additional growth challenge this winter. Paolo Grignani of Oxford Economics saw "stagflationary tendencies: GDP growth held up well, but national inflation releases surprised to the upside."

France has not grown at all in 2026. Its bond yields are at their highest level since 2002.