Low inflation sparks alarm in Italy

Economists, unions, trade and consumer groups call for action

(ANSA) - Bologna, June 30 - Low inflation figures for Italy on Monday sparked alarm that recovery from the country's longest recession in decades may not be taking hold.
    Annual inflation in Italy was down to 0.3% in June, the lowest it has been since October 2009, provisional data from national statistics agency Istat showed. The Italian small and medium business association Confesercenti called it a "potentially fatal risk" to the Italian economy.
    "Inflation"s slowdown in June is worse than expected, and now a scenario of negative inflation appears more realistic," explained Confesercenti in a statement decrying high taxes and continuing credit squeeze on businesses.
    The group, which says it 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".
    The chief economist for the Italian think tank and consulting group Nomisma, Sergio De Nardis, called the inflation data "an alarm bell that continues ring".
    "It is not clear whether policy has completely taken this into account. The ECB (European Central Bank) action, which begins with the emission of liquidity and will be had in September, may not be enough," said De Nardis.
    "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," De Nardis explained. 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 the handicapped, 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". Spending on food fell back to levels seen 30 years ago, with a loss of 3.6 billion euros worth of spending in 2013. Meanwhile, consumer groups Federconsumi and Adusbef expressed skepticism, calling Istat"s June inflation numbers "unlikely". The groups said Istat's data were too low, and spawn "doubts about what were the exotic locations where Istat carries out its surveys".
   

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