Italy agrees ‘anti-inflation pact’ to counter soaring cost of staple goods

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Italy’s rightwing government has agreed an “anti-inflation pact” with producers and retailers to hold down prices for pasta and other consumer staples, as Rome attempts to ease the pressure on households reeling from higher living costs.

The government said on Friday it would launch an “anti-inflation quarter” for the three months from the beginning of October until the end of the year. While the precise details remain fuzzy, the pact commits its signatories to try to resist raising prices, which have soared over the past years following the pandemic and Russia’s invasion of Ukraine.

The pact follows months of negotiations between Prime Minister Giorgia Meloni’s government and Italy’s business establishment over what to do about the soaring cost of staple goods such as pasta.

Adolfo Urso, the minister of enterprises who met the business organisations, wrote on Friday on the social media platform X that Italian businesses large and small were now engaged “in a collective effort to contain the prices of the Italian shopping basket”.

Participating companies will be entitled to use stickers and other promotional material with a logo of a shopping cart in the green and red colours of the Italian flag.

Speaking separately to journalists after meeting representatives of major consumer goods producers, Urso said the new pact — which will cover selected food products and other common household essentials — would “give a definitive blow to inflation” and increase public consumption, providing an overall economic boost to the country.

Eurozone inflation reached double digits during the autumn of last year after Russia’s invasion of Ukraine pushed up the cost of food and energy. At 5.3 per cent in the year to August, inflation remains substantially above the European Central Bank’s target of 2 per cent.

Italy’s inflation rate was 5.5 per cent in the year to August, according to official estimates. That is a lot lower than the 11.9 per cent reached in October 2022, but still uncomfortably high.

The worst spate of inflation for a generation has triggered accusations of greedflation, with some saying companies are taking advantage of higher costs to bolster their profit margins. However, retailers, especially in the food sector, claim their margins are small and have shrunk even further owing to higher prices from their suppliers and higher labour costs.

The Federation of Italian Food Industries, which endorsed the pact, said the local food industry’s margins have already declined from an average of 10.3 per cent in 2019 to 5.7 per cent last year because of higher raw materials costs.

“The sense of responsibility and protection of Italians and families in difficulty have prevailed,” the organisation said in a statement. 

Consumer organisations expressed scepticism that Italy’s three-month campaign against inflation would yield substantial benefits.

“The government is giving a big gift to retailers who will boast that they are the saviours of the country,” said Massimiliano Dona, president of the National Consumers Union. “It’s all smoke and mirrors . . . it’s fluff.”

Meloni’s government has shown a strong tendency to intervene when it feels consumers are getting a raw deal. Rome has found itself in a row with European airlines, led by Ryanair, over its attempt to cap airfares after ticket prices to popular holiday islands soared over the summer.