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Italy: Consumers pessimistic as wages shrink in sagging economy

last update: January 26, 14:25

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Rome, 26, Jan. (AKI) - New data about Italy indicates that households in the eurozone's third-richest country are fearful about the state of their economy that is shrinking, along with consumers' spending power.

Consumer confidence this month matched December's 16-month low, while the gap between inflation and the increase in wages was the greatest since 1995, national statistics agency Isat said Thursday in a pair of reports.

The confidence index stayed put at 91.6, matching the previous month, the lowest since January 1996, according to Rome-based Istat. Hourly wages in December rose 1.4 percent from the same month in 2010, while inflation jumped 3.3 percent during the same period, according to another report.

Italians are struggling to make ends meet as their economy falters amid its fourth recession since 2001.

Mario Monti - leading a group of technocrats, or non-political experts - took over the government in November when a spiralling debt crisis and scandals derailed Silvio Berlusconi's conservative ruling coalition.

Worries increased among the other 16 countries that use the euro currency and international investors regarding Italy's ability to pay interest on its 1.9 trillion euros of debt. Monti reacted by passing emergency budget laws and rules to open sectors of the economy to more competition, prompting strikes and protests. Indicators measuring confidence in Italy have since fluctuated.

Economic conditions for Italians may worsen as they feel the bite of new government measures like tax hikes and pension reform designed to reduce debt and balance the budget.

Deputy finance minister Vittorio Grilli in December forecast Italy's economic output to shrink this year and stagnate in 2013.

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