financial conditions worldwide. real rates increased at all maturities and share prices fell, amid rising volatility. risk premia on european asset classes have gone up relatively more, owing to the stronger impact of the war in ukraine. tensions emerged in some key currency markets, including the yen and the british pound markets. financial markets remain exposed to a variety of risks. stock and bond markets are volatile, and exposed to changes in investor sentiment ; in this context, the importance of preserving confidence in the government bond market, with a credible long - run strategy for the public finances, is, i think, well understood. private credit risk may also increase because of weakening growth and increasing debt servicing costs. tensions on commodities markets have increased and may remain elevated. high natural gas prices have already started to spill over to substitutes ( coal for instance, and also elements used in the production and storage of renewable energy such as lithium and nickel ), and to energy - intensive commodities. 2 / 4 bis - central bankers'speeches a protractedly deteriorating macroeconomic environment might affect italian firms'vulnerability. on the other hand, in italy stability risks stemming from households appear limited overall, thanks to low indebtedness ; the increase in energy prices, though, is making its impact felt on the most vulnerable ones. bank credit to the italian private sector continued to expand at a robust pace in recent months. the italian banking system is facing the risks linked to the current situation from a stronger position than on the eve of previous crises. banks'asset quality remains good on average, and the new non - performing loan ratio is still low, although the share of stage - 2 ( i. e., riskier ) performing loans has started to increase. banks'capitalisation, while coming slightly down in the first half of the year, is higher than before the pandemic. with all this, banks remain highly exposed to cyclical risks, and should cautiously factor in all uncertainties when making their risk and capital management decisions. insurance the impact of the market turmoil on italian insurers'solvency ratio has remained modest until now. in the market - consistent framework on which prudential standards are based, ( risk - free ) interest - rate increases act on both sides of insurers'balance sheet. the fair value of assets decreases, but so does also the present value of technical provisions, the main liability in their balance sheet. at the end of june, italian insurers'average solve

it is next to impossible to make predictions. consumer inflation, pushed by its more volatile components, reached 9. 5 per cent yearon - year in september, a figure not seen in more than three decades. the general index mainly reflects the direct and indirect effects of energy prices, as well as the increase of food prices. energy prices kept increasing, by 45 per cent year - on - year. even core inflation, however, reached 4. 4 per cent, owing to the acceleration of both services and non - energy industrial goods. 1 / 4 bis - central bankers'speeches inflation expectations for 2023 and beyond vary depending on sources and methods used to measure them, but have been on the increase. according to the september wave of consensus economics, inflation projections for italy in 2023 stood on average at around 4. 3 per cent, more than one point higher than the in previous month's estimates. our own inflation scenarios will be unveiled on 13 october, together with the growth scenarios. despite these developments, in august contractual wage growth was broadly stable, at 1. 0 per cent year - on - year in the non - agricultural private sector. looking ahead, forceful action to reduce inflation is essential to preserve the purchasing power of households and avoid'pointless wage - price spirals'1. price stability is the lodestar of central banks. central banks all over the world have started a normalisation of monetary policy. many governments in europe have adopted measures to mitigate the immediate impact of exceptionally high increases in energy prices on household and firm balance sheets. while it makes sense to smooth temporary peaks, it is important to remember that energy prices had to go up to achieve our stated long - term goal of climate transition ; the current turbulence makes that goal even more vital. relative price signals should, by and large, be preserved, also to help balance demand and supply in the current circumstances. better to concentrate the limited public - budget resources available on income relief for the most affected households, and on investment in renewables and energy efficiency. collectively, there is no escaping the'unavoidable tax'2 imposed on us by higher fossil fuel prices – except by reducing our dependence on fossil fuels. keeping prices low through debt - financed subsidies is illusory in the long run, and would shift the financial and environmental burden once again to the next generations, which will inherit from us a heavy enough burden anyway. financial developments since the end of july, there has been a marked deterioration in