Consumers, producers and retailers had different reactions to Monday's report from national statistics bureau Istat that Italy's year-on-year inflation rate last month held at 1.6%
In its preliminary report for February, Istat said that inflation remained at January's level, after falling from December's 2.2% rate, although the consumer price index rose by 0.2% from January to February.
Fuel prices last month rose 2.5% over January but remained 15.6% lower than February of last year, compared to an 18.1% year-on-year decline in January.
Pasta prices declined 1.8% from January to February but remained 16.5% higher than February 2008, compared to a 25.4% year-on-year difference in January.
The year-on-year hike in food prices stood at 3.5%, more than double the inflation rate, and the Coldiretti farmers' union blamed this on ''inefficiency and speculation which in 2008 cost the Italian consumer four billion euros''.
According to Coldiretti, food prices last year climbed by an average of 5.4%, compared to an average inflation rate of 3.3% for the year, while producer prices for farmers sank by an average of 14% over 2007.
The Confcommercio retailers' association said that the 1.8% monthly decline in pasta prices indicated that the upward surge in food prices had ended and that, barring unforeseen circumstances, these prices should be stable for the near future.
The consumer group Codacons disputed this and argued that the decline in pasta prices was ''ridiculous'' for how little it was, in consideration of the plunge in grain prices.
Codacons added that the fact that inflation remained at 1.6% in February was an indication that the downward trend in inflation had levelled out.
Evidence of this, Codacons observed, was the 0.2% increase in the consumer price price index from January to February, after it has declined by 0.1% the month before.
Retail services association Confesercenti warned that the inflation news was good on the one hand but bad on the other because, combined with the confirmed 1% drop in GDP for 2008, it set the stage for a cycle of deflation.
Deflation is when consumer prices fall because a lack of cash or credit results in reduced spending. Lower economic demand in turn results in greater unemployment and the failure of many small businesses
The consumer groups Adusbef and Federconsumatori calculated that with inflation at 1.6%, Italian households would have to shell out an additional 480 euros those year to pay for the same amount of goods and services the consumed last year.
Given that available family income has not increased sufficiently, the most likely scenario is that consumers will continue to tighten their belts and put a further damper on the sagging economy, the groups said.
