News that inflation was down in July received a warm welcome in government circles but was met with scepticism from consumer groups.
National statistics bureau Istat reported Tuesday that, based on preliminary data, the year-on-year inflation rate fell back to its May rate of 1.6%, after climbing to 1.7% last month.
The increase in the consumer price index for the month, Istat added, was 0.2%.
Istat's definitive inflation report is expected in two weeks' time.
The news from Istat was defined as "encouraging" by Industry Minister Pierluigi Bersani who added that this was in part thanks to his campaign to deregulate sectors of the Italian economy.
"It is quite clear that the positive contributions from those sectors which have been subject to liberalization have offset the price hikes related to our energy bill," the minister explained.
Because of price increases for prime resources expected this autumn, Bersani observed, "it is even more important to continue to liberalize certain sectors in order to increase efficiency and contain costs".
A third package of Bersani's deregulation measures is currently before parliament.
July's drop in inflation "would be great news were it true," remarked the Adusbef and Federconsumatori consumer watchdogs.
"Unfortunately, Istat's data is contradicted by the difficulties families find themselves in to make ends meet and which had forced 51% of them to forego a vacation this year," the groups added.
The highest year-on-year price increases this month were recorded for restaurants and bars (+3.1%); home furniture, furnishings and services (+2.6%); tobacco and alcohol products (2.4%); and food and non-alcoholic beverages (2.4%).
Communication prices saw the greatest drop in prices over July 2006 (-9%).
Compared to June, prices rose the most this past month for transportation (+0.8%), restaurants and bars (+0.6%) and communication (0.3%).
If confirmed, Italy's 1.6% inflation rate places it below the 1.8% average in the 13-nation euro zone
The following table shows the monthly variation in Istat's cost of living index and the annual inflation rate since January 2006.
monthly % var. annual % var.
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JANUARY 2006 +0.2 +2.2
FEBRUARY +0.2 +2.1
MARCH +0.2 +2.1
APRIL +0.3 +2.2
MAY +0.3 +2.2
JUNE +0.1 +2.3
JULY +0.3 +2.2
AUGUST +0.2 +2.2
SEPTEMBER -0.1 +2.1
OCTOBER -0.1 +1.8
NOVEMBER +0.1 +1.8
DECEMBER +0.1 +1.9
JANUARY 2007 +0.1 +1.7
FEBRUARY +0.4 +1.9
MARCH +0.2 +1.7
APRIL +0.2 +1.5
MAY +0.4 +1.6
JUNE +0.2 +1.7
JULY +0.2 +1.6
