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How will Italy fight the rising cost of everyday goods?

The level of inflation in Italy reached 8 percent in June. What products are getting more expensive in the country and what measures are being taken by the Italian government to keep prices down?

How will Italy fight the rising cost of everyday goods?
Italians are seeing higher prices in supermarkets. Photo by ANDREAS SOLARO / AFP

Italy’s national statistics institute Istat has estimated inflation for June 2022 will hit 8 percent, up from 6.8 percent in May. The country hasn’t seen such a spike in prices since January 1986.

“All of us in the government have the task of killing the inflation monster”, Minister for Public Administration Renato Brunetta said in an interview with Quotidiano Nazionale on Sunday.

He said the government is pushing for a price cap on gas and oil prices and calls for a “European agreement now” to regulate limits.

Any measures to create a ceiling for prices would need to follow European regulations, and EU countries must agree on them.

READ ALSO: Who can claim Italy’s €200 cost of living bonus?

A major issue with rising prices is that wages lose their value, Brunetta explained. As a result, Italians can now buy fewer things with the same salary as one year ago.

Worker’s unions are looking to adjust collective agreements for wage readjustments, while companies fear that simply increasing salaries could prolong the crisis, Brunetta said.

What is the government doing to combat inflation?

The minister said then that the government is proposing a reduction in taxes incurred in workers’ wages to increase purchasing power without overburdening employers.

He added authorities are also looking into “targeted and selective interventions”, including extending social benefits to low-income people.

Among the measures and proposals, he mentioned the targeted €200 bonus for Italian households to help with utility bills.

The payments were announced in May alongside other government measures to offset the soaring cost of living, such as extending energy bill discounts and rolling on the deadline to claim Italy’s popular ‘super bonus 110’.

Pension amounts will also be reevaluated and adjusted for inflation more often and at higher rates, the minister said – the same with severance payments. He didn’t give further details, though.

Where can the increases be seen more dramatically?

Italy’s statistics institute says that “several types of products” have had price increases in the country, according to a press release. The main increase (48.7 percent year on year) can be seen in “energy goods”, such as fuel and gas.

READ ALSO: Italian property prices continue to rise in 2022

Food in Italy is also getting more expensive, both unprocessed food (9.6 percent increase) such as fruits and vegetables, and processed food (up by 8.2 percent).

Recreational, cultural, and personal care services are also more expensive, up 5 percent compared to June 2021.

The institute says that the highest increases can be seen in housing, water, electricity and fuel supply. Or essential goods and living conditions for Italian households.

As fuel prices soar worldwide, Italy is also experiencing an increase in transport costs.

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EXPLAINED: What is Italy doing to cut the rising cost of living?

Amid soaring inflation and price rises, the Italian government has announced new measures to help families and businesses keep costs down. Here's what you need to know.

EXPLAINED: What is Italy doing to cut the rising cost of living?

Italy approved a much-anticipated aid decree on Thursday, August 4th, bringing a new round of state funding intended to tackle the country’s most critical issues: from the rising cost of living and sky-high inflation to the energy and supply crisis. 

READ ALSO: Fuel tax cut and help with energy bills: Italy approves inflation aid package

The ‘aiuti bis’ aid package, worth around 17 billion euros ($17.4 billion), likely marks the last major act by outgoing prime minister Mario Draghi before an early general election next month.

The funding is seen as badly needed after inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

After weeks of speculation about exactly which measures may or may not be included in the decree, we now know it contains everything from an extension to the fuel duty cut to more help with energy bills for those on lower incomes.

Here’s what you need to know about the latest measures intended to keep the cost of living under control.

Extension to fuel duty cut 

The current discount on fuel duties is to be extended again to September 20th, though the value of the discount will drop from 30 to 25 cents. 

The discount was recently extended to August 21st but the government decided to further prolong the incentive in a bid to ease the blow that record fuel prices have dealt to consumers and businesses.

The cut was initially introduced as far back as March when the average prices at the pump for petrol and diesel both exceeded the two-euro mark.

Help with energy bills

Measures introduced in the first half of the year to help lower-income households and vulnerable people pay rising energy bills will be extended under the new decree.

It extends an existing government discount on gas and electricity bills for a further three months, until the end of 2022, as well as reducing system charges.

READ ALSO:

Italy’s tax on the ‘excess profits’ of energy companies has meanwhile been extended to June 2023 after the government reportedly received fewer payments than expected.

Tax cut for employees

Workers earning a gross income of under €35,000 are eligible for a two percent tax saving, amounting to a small monthly ‘pay rise’ until the end of this year.

“Already in the budget law we reduced social contributions by 0.8 percent; for the second half of the year this reduction goes up to 2 percent, as we’re now adding 1.2 percent”, said Economy Minister Daniele Franco at a press conference on Thursday.

As the tax relief lasts until the end of the calendar year for a six-month period, the July deduction will be retroactive.

New aid measures announced on Thursday are hoped to boost Italy’s consumer spending power as the cost of everyday goods rises. Photo by ANDREAS SOLARO / AFP

Those earning €35,000 can expect to save around a further €30 per month (1.2 percent of a monthly salary of €2,692 – most Italian salaries are paid out over 13 rather than 12 months to give employees a tredicesima Christmas bonus).

To find out how this may apply to you, it’s advisable to speak to an accountant or your local Italian tax agency (Agenzie delle entrate) office.

More funding for mental health treatment

The new decree will also enhance the existing ‘psychologist bonus’ (bonus psicologo) by allocating an additional 15 million euros to the measure. This will bring the total amount of funds available for the bonus to 25 million euros. 

The bonus was officially introduced at the end of July to help make mental health services more affordable, amid a pandemic-induced crisis in Italy.

All individuals with an Isee (a calculation of relative household income and wealth) lower than 50,000 euros will be eligible to receive a 600-euro voucher, which they’ll be able to use when seeing professionals listed on Italy’s official register of psychologists.

See more information about claiming the bonus in a separate article here.

Discount on public transport tickets

The government will allocate a total of 101 million euros to funding its ‘transport bonus’ (bonus trasporti); 22 million more than the original amount.

The bonus takes the form of a one-time 60-euro discount to be used on the purchase of monthly or yearly tickets for local transport services.

It will be available from September 2022 to all pensioners, students, and employees with an Isee of up to 35,000 euros.

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