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UniNews: the UniCredit Weekly Magazine
 
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March 08, 2010
Two speeds

Inflation continues to rise as the summer freeze becomes a distant memory. In fact 2010 began with a 1.3% price hike: this was the figure certified by Istat in January compared with the same month in 2009, whilst in December the rise was of 0.1%. On an annual basis, it is the biggest increase for almost a year, or since last February to be precise. The rise in prices has been spearheaded by everyday goods, with a double figure rise in petrol prices (+17.9%). The price of groceries has also gone up by 2.5%, causing alarm among consumers, with families set to spend 390 euro more per year. Rises that, according to Federconsumatori and Adusbef, are even more expensive as they are proceeding at the same rate as the fall in consumption and income levels, that is, with an economy still suffering the effects of the crisis.

Consumers and trade unions are therefore particularly wary of the increase in prices of high frequency items or, in other words, their daily spending, which in January rose by 2.5% year on year, and 0.3% compared with December. A rise driven by fuel prices, which sees petrol in pole position (+17.9% YoY and +2.2% compared with the previous month), followed by diesel (+9.5% YoY and +2.9% compared with the previous month). Less strong is the impulse of food products, even if the sector registered an acceleration in inflation compared with January 2009 (+0.4%). Compared with last year, there has been a price hike above all as regards to fresh vegetables (+3.7%) and fish (+1.4%), which also went up on a monthly basis (0.3% and 1.5% respectively).

In the services sector, rail transport prices continue to rise (+14.9% YoY and +2.6% on a monthly basis), as do motorway tolls (+7.0% YoY +2.7% on a monthly basis). Postal services have also become dearer (even if only generally speaking, +11.2% YoY) as have drinking water services (+6.2% YoY and +2.6% on a monthly basis).

Two pieces of Istat data in January are worthy of further reflection: transport, which rose + 3.7% YoY, and teaching, up 2.5%. According to Adiconsum, the data regarding teaching is worrying as it shows how education is increasingly less of a public right, and more of a burden on families.
According to Adiconsum, the Istat data does not reveal another important piece of data for families and businesses: the cost of interest on mortgages and consumer credit. This interest has grown significantly and is an increasingly heavy burden on families, so much so that it has provoked a growth in family debt.

According to Federconsumatori and Adusbef ''this increase in prices has further weakened the already precarious situation of many families, who are now faced with spending an extra 390 euro a year". The rise in inflation – they argue – "completely contradicts the economic trend of market demand, which has seen a strong reduction in consumption (from -2.5% to -3%) and a vertical fall in family incomes (-1.8% to -1.9%)''. They regard the situation in France as normal, however, with consumption and prices both falling in January.

Still on the issue of consumers, Codacons goes further to argue that the increase in the cost of living is well above the official figure of 1.3%, currently certified by Istat. ''There is actually an underestimation in the January inflation rate'', and we should take the rate calculated on the basis of our shopping trolleys as our reference. And it is the price increases on everyday items that are also worrying the Cgil: for secretary general, Guglielmo Epifani, what is required are policies that keep "prices under control without raising interest rates" and above all without penalising the most susceptible sections of society, such as pensioners and those receiving redundancy funds. For the confederate secretary of the Uil, Antonio Foccillo, "the real problem remains that of low salaries and low pensions", which can be resolved with "a real plan to relaunch consumption and defend spending power".
Coldiretti warns of the speculation along the commercial supply chain. "A few cents paid to farmers become euros at consumer level, increasing the spread as products are transferred from farm to fork with prices rising by around 5 times on average nowadays".





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