Italy’s public debt has hit a record high, the central bank announced on Tuesday, driven by a weaker Euro and higher prices.

According to the Public Finance Supplement of the Bank of Italy’s monthly bulletin, debt amounted to €2.766 trillion, an all-time high in absolute terms. This is 1.9% more than the €2.714 trillion registered at the beginning of the year.

One of the main reasons for the rising debt is a weaker Euro, as the majority of the country’s debt is priced in Euros. At the end of June, when the central bank’s report was formulated, the Dollar and Euro were trading fairly equally, with the greenback briefly topping the Euro’s value several times last month.

The Bank of Italy added that elevated prices have been a mixed factor to the burgeoning public debt. Tax revenues have been driven up, rising 11.9% in the first half of the year, compared to the same time last year, adding a further €23.2 billion in revenue.

However, inflation together with political uncertainty and fears over the impact of the war in Ukraine have pushed bond yields to eight-year highs. Indeed, the yield on Italy’s 10-year government bonds was 3.135%, up from 1.089% at the beginning of the year.

Furthermore, heightened public spending is another key factor behind the rise in Italy’s debt, as the government took action to help mitigate the impact of the pandemic.

The country’s debt burden is being helped in 2022 by a recovery within the tourism industry. According to Italy’s JFC Observatory, tourist tax revenue has risen close to 80% so far this year, compared to the same period in 2021, as the sector rallied from the Covid restrictions.