Italian consumer confidence rose slightly (but ever so slightly, see chart below) in April - holding near its lowest level in almost four years as an economic slowdown prompts households to cut back on spending. The Rome-based Isae Institute's index, based on a survey of 2,000 families, rose to 99.8 from a 99.0 last month. The March reading was the lowest since May 2004.
Rising food costs and oil prices near the $120 a barrel mark are stifling consumer spending as wage growth stagnates. Even with economic growth slowing, higher energy and commodity prices have pushed the inflation rate to its highest in at least 11 years, further sapping optimism.
The Italian economy may have already slipped into recession in the first quarter - or even in the last quarter of 2007 . Italy has suffered three recessions between 2001 and 2005. According to the IMF Italy will grow by 0.3 percent this year, half the pace of the U.S. and a fraction of the 1.2 percent growth rate anticipated for the entire euro region. Making this the 12th year in a row that Italian growth has been below the average rate for the euro-region.
Italian retail sales fell at the fastest pace in four years in March as campaigning for national elections drew to a close and added to concern about the economic outlook, the Bloomberg purchasing managers index showed.
For a much fuller study of the issues which lie behind the present economic malaise in Italy see my full-study "Italy's Economy Going Into The 2008 General Election" post.
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