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Cash-strapped households set to shun New Year sales

Plummeting purchasing power keeps two-thirds away from bargains

02 January, 19:30
Cash-strapped households set to shun New Year sales (By Denis Greenan).

(ANSA) - Rome, January 2 - Italians are set to shun New Year sales again this year as the effects of the country's longest postwar recession and a steady drop in purchasing power linger, according to reports on the first, very partial day of sales Thursday.

The sales got off to a very slow start, mainly because just three regions - Val d'Aosta in the far northwest and Campania and Basilicata in the south - were already offering the traditional discounts ranging between 50% and 75%.

The other 17 regions will kick off their sales on Saturday.

The streets of Naples were not crowded with shoppers.

"The only ones buying anything are tourists," one shop owner told ANSA. Trade was brisker in the Alpine resorts of Courmayeur and Cervinia, where wealthier Italians seemed to have plenty of money to splash around. The Codacons consumer group said total spending would be 12.5% down on last year with only 35% of households having set aside some cash after eight straight quarters of negative GDP - Italy's longest postwar downturn - ended with zero growth in the third quarter of 2013.

Average spending would "not go over the 200-euro mark," Codacons said.

Another big consumers' group, Federconsumatori, said sales outlay would be 194 euros per household, an 11.3% drop on 2013, which saw a fall of 18.8%.

Italian households have seen their purchasing power sink by 9.4% between 2008, when the global economic crisis began with force, and 2012, pension agency INPS said last month.

The crisis became especially acute between 2011 and 2012 as the deepening recession - the second after one in 2009 - squeezed Italians' buying power by 4.9%.

Since 2008, disposable income fell an average of 1.8% per year, with a deeper drop of 2% from 2011 to 2012.

The number of people in Italy living in absolute poverty has doubled between 2005 and 2012 and tripled in the industrial north, up to 6.4% from 2.5%, according to an annual report on social cohesion released December 30 by national statistics bureau Istat.

Overall, more than 1.7 million families live in a state of absolute poverty for a total of 4.8 million individuals amid rising unemployment and a stubborn recession, Istat said.

Households or individuals are classified as living below the poverty line when their monthly expenditure does not enable them to acquire goods and services considered essential for an acceptable standard of living, the report said.

Such a threshold varies according to geographical location and the number of household members and their age.

Istat noted earlier last year, for example, that the percentage of Italian families with three or more children living in absolute poverty jumped to 16.2% last year from 10.4% in 2011 while the number of single-parent families in absolute poverty jumped to 9.1% from 5.8% the previous year.

The report on social cohesion released also highlighted that 12.7% of families and 15.8% of individuals living in Italy suffered from relative poverty in 2012, the highest level since 1997 when the bureau started recording poverty levels in the country.

Overall, 3.2 million families - or 9.5 million individuals - lived in relative poverty in 2012.

The relative poverty threshold was measured by Istat as an average monthly budget for a two-member household which did not exceed 990,88 euros last year.

Italy has seen the risk-of-poverty rate rise to almost 30% in 2012, according to the 'Europe 2020' report, the highest recorded in Europe after Greece, the report on social cohesion also noted.

After eight consecutive quarters of negative growth, the country's gross domestic product (GDP) was flat in the July-September period with respect to the previous three months.

The government forecasts that Italy was returning to positive growth in the fourth quarter of 2013.

Italian Premier Enrico Letta said last month he was confident Italy's economy can grow 1% next year and 2% in 2015.

Unemployment in Italy has reached record levels of over 12%, with more than four in 10 under-25s out of work during the recession.

The downturn was made deeper by EU-mandated austerity measures adopted by the emergency technocrat government of Letta's predecessor, Mario Monti, to avert a Greek-style financial meltdown and possible contagion posing a threat to the whole eurozone.