Italian consumer confidence fell to its lowest in nearly four years in March as rising prices and slowing economic growth increased pessimism among growing numbers of Italians. The Rome-based Isae Institute's index, based on a survey of 2,000 families, fell to 99 from a revised 102.8 in February. This reading is the lowest since May 2004.
Italians have been steadily cutting back on their spending, which makes up two-thirds of the economy, as the continuing rise in the cost of food and transportation reduces their disposable income. ISAE predicts the Italian economy will grow by as little as 0.5 percent this year, the slowest pace since 2003.
The sub component concerning optimism about the current economic situation fell to a 14-year low of minus 132 from minus 118, ISAE said. The number of Italians who are ``very concerned'' about rising prices is at a four-year high.
Obviously overhanging the whole economic climate is the current election campaign, which was triggered by the collapse of Prime Minister Romano Prodi's government in January after 20 months in power. Both leading candidates, two-time premier Silvio Berlusconi and former Rome Mayor Walter Veltroni, are promising tax cuts to help revive growth, although given the large fiscal constraints that this growth slowdown will present, it is far from clear where any of these will come from.