No. 1044 - Household consumption in Italy: basket composition and responsiveness to macroeconomic shocks
The paper studies the evolution of the basket of goods and services consumed by households in Italy. It also assesses the transmission of macroeconomic shocks to the different components of expenditure, focusing in particular on the effects of energy price increases and the European Central Bank's monetary policy.
Over the past two decades, the share of household expenditure devoted to services has increased in relation to goods. Furthermore, the transmission of macroeconomic shocks to consumption operates almost exclusively through the discretionary components of spending on goods and services. Energy price increases trigger rapid adjustments in discretionary consumption, given their almost immediate impact on consumer prices and households' real disposable income. Monetary policy shocks transmit slowly to discretionary services expenditure, while they affect discretionary goods consumption more rapidly.
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