The Rise in Prices and the Fall of the Lira
Tipologia: Paragrafo/Articolo – Data pubblicazione: 27/07/1918
The Rise in Prices and the Fall of the Lira
«The Economist», 27 luglio 1918, p. 111
Turin, July 5
Professor Bachi has from the beginning of the war compiled an index number of prices on the lines of that of the Economist’s Index Number. The basis is 1901-1905, and the commodities selected are 40 in number, representing the most important markets. Subjoined is a comparison between Bachi’s and Economist’s index numbers:
| January, | January, | January, | January, | May, | |
| 1915 | 1916 | 1917 | 1918 | 1918 | |
| Cereals and Meat | |||||
| Italian | 142-9 | 179-9 | 210-4 | 3260 | 374-9 |
| British | 157-2 | 189-3 | 262-0 | 244-4 | 249-4 |
| Other Food Products | |||||
| Italian | 1160 | 177-9 | 219-6 | 285-1 | 333-8 |
| British | 137-7 | 155-0 | 187-0 | 228-7 | 259-2 |
| Textiles | |||||
| Italian | 103-5 | 1891 | 301-3 | 513-8 | 578-3 |
| British | 107-0 | 156-5 | 227-4 | 343-9 | 354-7 |
| Minerals and Metals | |||||
| Italian | 167-0 | 434-3 | 507-1 | 869-4 | 950-8 |
| British | 130-2 | 190-4 | 206-4 | 207-2 | 212-4 |
| Miscellaneous | |||||
| Italian | 126-4 | 2120 | 247-6 | 388-1 | 454-3 |
| British | 149-6 | 176-9 | 223-9 | 265-8 | 273-8 |
| General | |||||
| Italian | 132-7 | 232-3 | 290-0 | 462-3 | 523-0 |
| British | 136-5 | 174-5 | 225-1 | 262-9 | 273-4 |
For the sake of comparison, the Economist’s Index Number has been reduced to a percentage change, the 1901-1905 level being taken as 100. The difference between Italian and British index numbers is largely explained by the depreciation of the lira:
| Jan., | Jan., | Jan., | Jan., | May, | |
| 1915 | 1916 | 1917 | 1918 | 1918 | |
| Excess of Italian over British number index | -3-8 | + 57-8 | + 64-9 | + 199-4 | + 249-6 |
| Of which the depreciation of the Lira explains | + 5-3 | + 46-0 | + 72-3 | + 162-3 | + 194-6 |
| Other causes | -9-1 | + 11-8 | -7-4 | + 371-1 | + 551 |
Apart from minor fluctuations, the prices were, during the first three years of the war, higher in Italy by about the amount of depreciation of the lira. In 1918 they are higher than would be explained by this depreciation. The fall of the exchange value of the lira continues, however, to explain by far the largest part of the difference between the rise of prices in Italy and the rise in Great Britain and other Allied countries. This explains the widespread desire that something should be done towards fixing the exchange between the lira and the pound sterling, or dollar or franc, at a level more favourable to Italy. The Rome Exchange Institute has not been very successful in its endeavours to that end. Public opinion in Italy has greeted with favour the announcement that the United States Government countenances the idea of regulating the exchange between dollars and lira; and similar agreements with Great Britain and France will be welcomed. The gradual appreciation of the lira would be a great factor in the moral endurance of Italy during the war.
