Inflation hits 12- year high in 2008

Istat and consumer groups differ on annual rate

(ANSA) - Rome, January 5 - Italy's annual inflation rate in 2008 averaged out at 3.3%, its highest in 12 years, national statistics bureau Istat reported on Monday. In 2007 Italy's inflation rate was 1.8%. Istat's inflation figure for 2008 was contested by consumer groups Adusbef and Federconsumatori which claimed that the rate for 2008 was 5.9%. The consumer groups also calculated that inflation cost the average Italian family an additional 1,800 euros last year. Istat reported on Monday that Italy's year-on-year inflation rate in December fell to 2.2%, down from 2.7% in November, with a 0.1% monthly decline in the cost of living index. Istat explained that the year-on-year decline was due to a 16.2% drop in energy costs, which fell 4% over November. Unleaded fuel prices, for example, declined 8.1% from November to December and were 16.3% lower than December 2007, while diesel prices last month were down 7.6% for the month and 12.7% for the year, Istat said. The surge in pasta prices subsided somewhat in December but remained 28.2% higher than the same month in 2007, as opposed to a 29.8% year-on-year hike in November. Compared to last November, pasta prices in December diminished 0.2%. Bread prices in December were down 0.1% for the month and up 3.4% for the year. Prices also slowed last month for milk, cheese, eggs and meat, Istat said. 2008 A ''HORRIBLE YEAR'' FOR ITALIAN FAMILIES. ''Last year was a horrible one for Italian families. Prices began to decline only in the last months of the year and this was due to a drop in consumer spending,'' Adusbef and Federconsumatori said in a joint statement. The consumer groups explained that much of the additional 1,800 euros families were forced to spend was due to the high cost of maintaining a home with increases over the previous year of 12.6% for electricity, 13.1% for gas, 10.9% for water and 14.6% for refuse disposal. Added to this was a 9.4% hike in the cost of food for the year, the groups said. Aside from these additional costs, families were forced to pay more for mortgages if they took out loans at a variable rate, the groups observed. The consumer group Codacons on Monday predicted that in 2009 families will be forced to spend an additional 605 euros due to rising costs, especially for food and housing. INFLATION DROP TO OFFER RELIEF TO FAMILIES, MINISTERS SAYS. The decline in inflation recorded last month will give some relief to family budgets, according to Industry Minister Claudio Scajola. ''The significant drop in fuel and utility costs, coupled with those for food, will continue in the coming months. This means that in 2009 families will spend less than in 2008 and will be able to maintain their standard of living and spending habits,'' Scajola said. He went on to explain that the drop in inflation was Europe-wide and would create the conditions for a further cut in interest rates, which in turn would help boost the sagging economy. The improved economic situation was already apparent in the sustained level of retail business recorded at Christmas and now during the post-holiday sales period, Scajola added. ''What we need to do now is increase our efforts to curb the recession and support economic growth and employment,'' the minister said.

ITALIAN ECONOMY STALLED

Revised Istat figures shows GDP down 0. 1% in 2nd qtr

(ANSA) - Rome, September 10 - The Italian economy is in worse shape than previously expected and could be headed for a recession if GDP does not pick up in the third quarter. National statistics bureau Istat on Wednesday revised its figures for the second quarter of 2008 and said GDP fell by 0.1% over the same period the previous year, its worse year-on-year result since the third quarter of 2003, when GDP also fell by 0.1%. Last month Istat had predicted zero growth for the second quarter. Istat confirmed that GDP sank by 0.3% over the first quarter of the year, its poorest performance since the last quarter of 2007. Italian Premier Silvio Berlusconi downplayed the bad economic news and said ''I believe that I am the premier of a very solid nation with a high standard of living and of well-being''. The poor state of the Italian economy was confirmed by the European Commission which on Wednesday reduced its already modest forecast for GDP growth in 2008 to 0.1%, from 0.5% calculated last April. The EC added that the reduction ''implies that there is no impetus for growth in 2009''. According to the European Union executive, the Italian economy has been slowing down since the middle of last year ''and the outlook for the coming months is not encouraging due to a further decline in competitiveness and a drop in global demand''. The EC said it expected Italy's GDP in the third quarter to be unchanged over the second quarter but that the economy should pick up slightly in the final quarter of 2008 with a predicted decline in inflation. According to the EC, the stagnation of the Italian economy is primarily due to a decline in domestic demand brought on by a surge in consumer prices. Should Italy's year-on-year GDP fall in the third quarter, this will mean that the economy is formally in a recession. The national retailers' association Confcommercio said that the revised Istat figures ''confirm the risk of a recession, something which is already a reality for consumers''. ''Consumer spending has been falling for the past three quarters and indications are that this will get even worse, also give the results of the past season for tourism.'' the group added. ''Unless measures are adopted to boost consumer spending by increasing available income for families, the current crisis will compromise the economic picture in 2009,'' Concommercio warned. Concern over the state of the economy was echoed by leading consumer groups who said the situation was ''grave and worrisome''. ''The violent plunge ion consumer spending, caused by purchasing power at historic lows, has resulted in consequences which are clear to everyone,'' Federconsumatori and Adusbef said in a joint statement. ''On one thing I think we can all agree on to try and avoid recession and that is the need for the European Central Bank to cut interest rates by at least one percentage point,'' they added.

Consumer spending falls 2. 7% in May

No trend reversal in sight for 'dramatic' situation'
(ANSA) - Rome, July 4 - Consumer spending fell for the seventh month in a row in May, down 2.7% in volume compared to the same month last year, and there are no indications of a reversal in trend in the near future, the Confcommercio retailers' association reported on Friday.

The drop in May brought the average decline in consumer spending since the start of the year to 1.9%, compared to a rise of 1.1% in volume in the first five months of 2007.

According to Confcommercio, the May decline ''definitively erases any possibility of a trend reversal in the short term. The crisis is structural and profound and reinforces the forecast that economic growth this year will be next to zero''.

Because of their reduced purchasing power, Confcommercio observed, Italians are spending less on automobiles and on food, as well as on entertainment.

Due to a 5% hike in food prices, Confcommercio calculated that Italians Italians bought 3.3% less food, creating a situation which the Adusbef consumer group defined as ''truly dramatic''.

Confcommercio said Italians in May spent 13.5% less, compared to May 2007, on buying cars, motorbikes, fuel and plane tickets, while for the first five months of the year the reduction was 8.1%.

The decline in May for car sales was put at over 20% and 13% for motorbikes, while fuel sales were down 1%, indicating that Italians were increasingly leaving their cars in their garages.

For nonessential goods and services - which include entertainment and recreation - Italians cut spending by 4.9% in May and 5.1% for the first five months of the year.

The only area where Italians were still spending was for communications, which is also the only sector where prices continue to fall, but even here ''there are signs of a slowdown,'' Confcommercio said.

In a related development, the Coldiretti farmers' union reported on Friday that 44% of Italians last month never ate out at a pizzeria or restaurant and among those who did, 71% said they may not do so as frequently this month because of the need to tighten their belts.

ITALY: inflation hit 12- year high

Consumers and retailers concerned over soaring prices

(ANSA) - Rome, June 30 - Italy's year-on-year inflation hit a 12-year high in June sparking major concern among both consumers and retailers.

National statistics bureau Istat reported on Monday that inflation in June hit 3.8%, its highest since July 1996, with a 0.4% monthly increase in its consumer price.

Aggravating inflation again this month were the soaring costs of pasta and other wheat products along with runaway prices for fuels.

Compared to June 2007, pasta prices were up 22.4%, after climbing 20.7% the previous month, while bread cost 13% more, following a 13.3% hike in May.

Overall food and non-alcoholic beverage prices rose above average, jumping 6.1% in one year.

According to the consumer group Codacons, ''the record increases for food will have a very strong repercussion on consumer spending, which this year could fall by as much as 5%''.

The price increases over the past six months, observed Codacons chairman Carlo Rienzi, ''will cost each family a whopping 1,500 euros more''.

In order to combat inflation, Codacons called on the government to ''introduce triple-pricing by decree to show the consumer the cost of a product at its source and then at the wholesale and retail levels''.

The Coldiretti farmers' union reported that in the first three months of the year rising food prices had resulted in a 5.5% drop in the amount of bread Italians buy and a 2.5% reduction in the amount of pasta they eat.

Overall family spending on food, Coldiretti observed, is down 0.4% Energy prices in general rose 14.8% over June of last year, compared to a 13.1% hike in May, and were 2.8% higher than the previous month.

Diesel prices in one month jumped 5.5% and were 31.5% higher than June 2007, while gasoline prices rose 4.7% for the month and 12.6% for the year.

The general decline of consumer spending and the surge in inflation now also has retailers alarmed, with the national retailers association Confcommercio warning that ''if oil prices do not come down we can expect inflation to average out at 4% in 2008, instead of the 3% rate previously expected''.

''At this point it is no longer a question of inflation in one sector as opposed to another but involves the stability of the Italian economy as a whole,'' Coldiretti added.

The national association of retail services operators Confesercenti is also worried over the possibility of interest rates going up to combat inflation, a move they feel would dash all hopes of an economic recovery.

''If oil hits $200 in 2008 and interest rates rise to 4%, Italy will see zero GDP growth and this will lead to further repercussions in consumer spending even in healthy areas like tourism,'' Confesercenti warned.

Istat on Monday also reported that producer prices in May leapt by 7.5%, the biggest year-on-year jump since January 2003.

Despite hitting a 12-year high, inflation in Italy was below that of the 15-nation euro zone, where it rose this month to 4%, from 3.7% in May.