Inflation at 4.2%, Meloni asks Brussels for more fiscal headroom

Italian inflation rose to 4.2% in September, the highest level recorded since September 2023. The data emerged while the government was engaged in drafting the budget law, and prompted Prime Minister Giorgia Meloni to announce that she would send a letter to European Commission President Ursula von der Leyen.

The premier’s stated goal is to secure new fiscal headroom for households and businesses, bringing the inflation data to the attention of the upcoming Ecofin — the Council of the European Union’s economic and financial affairs ministers — so that it is taken into account in calculating European parameters and the permitted deficit.

“Because of inflation we need more flexibility,” Meloni said, summing up in a few words the request Rome intends to formalize in Brussels. The news currently comes from a single source — ANSA agency reports picked up by Today.it — and has not yet been independently confirmed by other sources.

The mechanism the premier is referring to touches on a structural issue in European budget rules: deficit and debt parameters are also calculated based on price trends, and higher-than-expected inflation can, depending on how it is treated in the calculations, either widen or narrow the room for maneuver available to a member state. The Italian request fits within this mechanism, asking that the September data be taken into account in the overall assessment of national public accounts.

Based on the material available, it is not yet known what response the European Commission will give to the announced letter, nor what specific measures the government intends to fund with any additional headroom obtained. What remains certain is that inflation at 4.2% represents the explicit starting point of the Italian request, and that the next Ecofin meeting has, with this announcement, become the event to watch to see whether Brussels will grant the space Rome is asking for.