2026-09-28
Perceived Inflation: Are We Really Poorer Than in 1995?
Perceived inflation: are we really poorer than in 1995?
When comparing today's prices with those of thirty years ago, we often make the same mistake:
"It cost 2,000 lire in 1995 and €3 today."
But converting lire into euros tells us very little. Salaries have changed too.
A better question is: how much of an average salary was needed to buy something then, and how much is needed today?
The answer is more surprising than it might seem.
Italian wages have barely moved in real terms
According to OECD data, Italy's average annual wage increased from roughly €18,262 in 1995 to €34,733 in 2025: about +90% in nominal terms.
Over the same period, Italy's general price level increased by approximately 78.5%, according to Istat's historical monetary conversion coefficients.
But the OECD series expressed in constant 2025 euros tells another story: average wages moved from roughly €33,959 to €34,733.
That is an increase of only about 2% in real terms over thirty years.
This may be the real Italian problem: we have not become dramatically poorer, but our real wages have barely progressed.
Not all prices behaved alike
Consider petrol.
Unleaded petrol cost around 1,730 lire per litre in 1995, equivalent to approximately €0.89. On 28 September 2026, the Italian national average self-service price was about €2.15 per litre.
That is an increase of more than 140%, considerably more than wages.
In this case, the perception that petrol has become expensive is justified.
Technology tells the opposite story.
Italy's price index for information and communication fell by roughly 62% between 1996 and 2025. Prices for computers and information-processing equipment fell by almost 90%.
And that comparison ignores the enormous improvement in what those products actually do.
Services became expensive
The strongest increases are often found in services.
The Italian price index for restaurants and hotels has more than doubled since the mid-1990s. Rents have also increased roughly in line with, or slightly faster than, general inflation.
This may explain why we remember the price of an ice cream, a pizza, a restaurant meal, a ski pass or a beach umbrella so vividly.
These are visible prices, and many services have risen much faster than manufactured goods.
We also invented new expenses
There is another factor affecting our perception.
A typical household in 1995 did not pay for fibre broadband, several mobile-data plans, Netflix, Spotify, cloud storage, software subscriptions and numerous other digital services.
Today €10 or €15 feels insignificant.
The problem is that we accumulate many such payments.
This could be described as a kind of lifestyle inflation.
Interestingly, this does not mean technology itself has become more expensive.
Istat notes that, despite the digital revolution, communications still account for roughly 2% of household expenditure. Unit costs have fallen dramatically.
What changed is how much technology we consume.
The paradox
There was no Netflix in 1995.
But households bought CDs and videotapes, developed photographs, paid for long-distance calls and text messages, and separately bought cameras, navigation devices, music players and encyclopaedias.
Today a single smartphone replaces many of them.
So every modern subscription cannot simply be counted as an entirely new cost.
Our economic lives have become much more complex.
Conclusion
Our perception of inflation may come from three different trends happening at the same time.
Italian real wages have barely increased.
Some very visible expenses — fuel, restaurants, leisure and parts of housing expenditure — have risen considerably.
At the same time, technology and many manufactured goods have become dramatically cheaper or vastly better, while the number of goods and services we routinely consume has multiplied.
We can therefore own far more than a typical household did in 1995 while simultaneously feeling that we have less money left at the end of the month.
Those two things are not necessarily contradictory.
They may simply describe how consumption has changed.
The numbers at a glance
| Item | Around 1995/96 | Today | Approx. change |
|---|---|---|---|
| General price level | 1995 = 100 | 2025 = 178.5 | +78.5% |
| Average annual nominal wage | €18,262 | €34,733 | +90% |
| Average wage in constant 2025 euros | €33,959 | €34,733 | +2% real |
| Unleaded petrol | €0.89/l | €2.15/l | +141% |
| Information and communication | index ~260 | index 100 | -62% |
| Computers / information-processing equipment | index ~704 | index ~81 | -88% |
| Restaurants and hotels | index ~62 | index ~126 | +103% |
| Actual rents | index ~54 | index ~100 | +85% |
Sector-specific price series start in 1996 rather than 1995 because of Eurostat data availability and comparability. The current petrol figure is a snapshot from 28 September 2026 and can change rapidly.
Sources
- Istat — The value of money in Italy from 1861 to 2025
Historical coefficients used to compare purchasing power over time. `https://www.istat.it/tavole-di-dati/il-valore-della-moneta-in-italia-dal-1861-al-2025/`
- OECD — Average annual wages, Italy
Dataset utilizzato per le retribuzioni medie annue nominali e a prezzi costanti. 1995: €18.262 a prezzi correnti / €33.959 a prezzi 2025. 2025: €34.733. `https://data-explorer.oecd.org/vis?df%5Bag%5D=OECD.ELS.SAE&df%5Bds%5D=dsDisseminateFinalDMZ&df%5Bid%5D=DSD_EARNINGS%40AV_AN_WAGE&df%5Bvs%5D=1.0`
- Eurostat — HICP, Harmonised Index of Consumer Prices
Historical consumer price indices by expenditure category. `https://ec.europa.eu/eurostat/web/hicp/database`
- Eurostat/FRED — Information and Communication, Italy
Price series used for the comparison of technology and communication costs. `https://fred.stlouisfed.org/series/CP0800ITM086NEST`
- Eurostat/FRED — Information Processing Equipment, Italy
Price series for computers and information-processing equipment. `https://fred.stlouisfed.org/series/CP0913ITM086NEST`
- Eurostat/FRED — Actual Rentals for Housing, Italy
Historical price series for residential rents. `https://fred.stlouisfed.org/series/CP0410ITM086NEST`
- OECD/FRED — Restaurants and Hotels CPI, Italy
Consumer price index for restaurants and hotels. `https://fred.stlouisfed.org/series/ITACPHP1100IXOBM`
- Italian Senate — Historical petrol price series
Historical data for Super and unleaded petrol prices during the 1990s. `https://www.senato.it/service/PDF/PDFServer/DF/9522.pdf`
- MIMIT — Fuel Price Observatory
Current national and regional average fuel prices in Italy. `https://www.mimit.gov.it/it/prezzo-medio-carburanti/regioni`
- ANSA / MIMIT — 28 September 2026
Italian national average self-service petrol price of approximately €2.152 per litre. `https://www.ansa.it/sito/notizie/economia/2026/09/28/mimit-prezzi-carburanti-in-calo-benzina-self-a-2152-euro_909a05a0-6b53-44a4-ba89-e28adaace76f.html`
- Istat — How consumption changed together with Italy
Historical evolution of Italian household consumption patterns. `https://www.istat.it/produzione-editoriale/consumi/`