Tumbling oil prices this past month will help lower Italy's year-on-year inflation rate to 2.7%, compared to 3.5% in October, and the biggest monthly drop in the consumer price index since July 1959, -0.4%, national statistics bureau Istat reported on Friday.
The Istat forecast was based on provisional data from telltale Italian cities, since definitive inflation figures will be issued in mid-December.
Prices for fuel at the pump fell 10.5% over October and were down 7.5% over November of last year, compared to a year-on-year drop of 5.5% last month, Istat added.
Soaring food prices appeared to level off this month, rising by only 0.1% over October and climbing 4.7% from November of last year, as opposed to a year-on-year hike of 5.2% last month.
However, pasta prices remained high and rose 0.5% in one month and were up 30% compared to November 2007, while the year-on-year increase in October was 31.6%.
Bread prices were up 0.2% from October and 4.2% from November of last year, down from the 6% jump in October.
Due to the consistent hike in pasta prices, the Coldiretti farmers' union on Friday called on Italy's antitrust authority to ascertain ''why pasta prices have continued to soar while the cost of wheat is half what it was a year ago and back to levels of 20 years ago''.
INFLATION LOWER ALSO DUE TO DECLINING CONSUMER DEMAND.
According to the national retail services association Confesercenti, the sharp drop in inflation this month was due to ''a major drop in demand, especially on the domestic market. Businesses are stalled, consumers aren't spending and the real economy is in a big chill''.
Confesercenti said that while the decline in oil prices was positive, ''attention should be focused on the general lack of confidence which is evident in this difficult economic and social moment''.
In order to pull out of this situation, the retailers' group said that ''the government and the opposition, in their different and respective roles, must come up with clear and immediate remedies''.
''This also to ensure that we don't miss the chance of using Christmas to rekindle consumer spending and breathe life back into the economy, especially for small and medium-sized enterprises,'' Confsercenti added.
The retailers' association then warned that ''while inflation can and will continue to fall, other indicators could rise, including business closures and unemployment''.
The consumer rights group Codacons agreed that inflation was falling due to a decline in consumer demand and added that this was because families had to ''spend more to buy less''.
According to Codacons, inflation will force families to spend an additional 1,700 euros this year for goods and services, as well as utilities and other fees, and they can only do this by buying less.
The only way to boost consumer spending in time for Christmas, Codacons said, ''is for retailers to slash their prices by 15-20%''.
The following table shows the year-on-year inflation rate over the past 13 months:
November 2007 +2.4%.
December +2.6%.
January 2008 +3.0%.
February +2.9%.
March +3.3%.
April +3.3%.
May +3.6%.
June +3.8%.
July +4.1%.
August +4.1%.
September +3.8%.
October +3.5%.
November +2.7% (to be confirmed).
