Italy's annual inflation rate fell
to 0.3% in June from 0.5% in May, the lowest level since October
2009, Istat said Tuesday confirming its preliminary estimate for
last month.
The national statistics agency added that the
month-on-month inflation rate was 0.1% in June.
When inflation is so low it is usually seen as an alarming
sign for the economy.
Price rises have been dampened by Italy's longest postwar
recession, which the economy is still struggling to recover
from.
Indeed, food prices actually dropped by 0.6% on the year
in June, the biggest dip since September 1997, Istat said.
The Italian small and medium business association
Confesercenti called the inflation level a "potentially fatal
risk" to the Italian economy when Istat released its preliminary
estimate.
"Inflation's slowdown in June is worse than expected, and
now a scenario of negative inflation appears more realistic,"
explained Confesercenti in a statement that called for lower
taxes and easier credit for businesses.
The group, which claims 350,000 member businesses, said the
inflation numbers "reflect a domestic demand that is still
extremely weak due to the difficulty of businesses and high
unemployment".
"To prevent stagnation or deflation, a more incisive
picture of European stimuli is needed, as much on the monetary
front as on fiscal support for demand," said the chief economist
for the Italian think tank and consulting group Nomisma, Sergio
De Nardis.
Maurizio Petriccioli, chief of the Catholic trade union
CISL, called for "extraordinary measures" to tackle the "strong
crisis of internal demand and consumption".
Petriccioli demanded that Premier Matteo Renzi's signature
tax cut of 80 euros per month for low earners be extended to the
retired and people on disability benefits , and that more growth
measures to
reward "virtuous" companies be undertaken.
Consumer group Codacons said it was "extremely worried"
over the Istat inflation data.
"In particular, the fall in food prices is absolutely
alarming," said Codacons President Carlo Rienzi.
"Prices fall only when consumers no longer buy, and if they
don't buy anymore, thousands of small businesses are destined to
close".
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