Italy says EU has to weigh inflation when assessing budget deviations

Italy Urges EU to Account for Inflation in Budget Rule Assessment

Italy's Call for Greater Budget Flexibility Amid Rising Inflation

ROME, Oct 7 (Reuters) - European Union authorities should take rising inflation into account when assessing government deviation from budget goals, Economy Minister Giancarlo Giorgetti said, arguing that higher prices can significantly affect governments' fiscal plans.

Giorgetti's Position on Budget Rules

• Giorgetti said he would raise the issue of greater budget flexibility at this week's meeting of euro zone finance ministers.

• "We are not questioning the budget rules, but we are asking that the rules be adapted to today's reality," he said.

Assumptions and Inflation Data

• Italy had agreed its spending targets with Brussels assuming annual inflation of 1.8%.

• However, Italian inflation jumped to 4.1% in September from 3.2% the month before.

Relevant Factors Influencing Fiscal Policy

• "We must consider the relevant factors that in some way influence today's environment," Giorgetti said.

• When assessing whether to open or escalate an infringment procedure against member states that fail to meet agreed spending goals, the EU Commission has to take into account relevant factors such as severe external shocks.

Impact of Energy Costs and Future Budget Plans

• "The burden of energy costs could (negatively) impact next year's growth by no less than 0.2% of GDP," Giorgetti said.

• Italy will approve 2027 budget next week, he added.

Reporting and Editorial Credits

(Reporting by Giuseppe Fonte, edited by Cristina Carlevaro and Nick Zieminski)