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Rome: Italian consumer confidence slumped in July to the lowest level since the 1993 recession after record food and energy prices eroded purchasing power.
The Rome-based Isae Institute's index, calculated from a survey of 2,000 families, fell to 95.8 from a revised 99.9 last month.
Economists had expected a decline to 99, according to the median of 13 forecasts collected by Bloomberg. In November 1993, the 26-year-old index hit a record low of 95.4.
Oil prices have risen 37 per cent this year, clouding the outlook for economic growth and driving up consumer prices in the 15 euro nations at the fastest pace in more than 16 years.
Atlantia, Italy's biggest toll-road company, announced last week it would offer drivers discounts on gasoline to try to increase traffic on its highways.
"Confidence has crashed," said Marco Valli, an economist at UniCredit in Milan, who forecast a confidence reading of 99.6. "People are spending less and will continue to make more and more cutbacks,"
Massive slowdown
Europe's fourth-biggest economy will expand 0.5 per cent this year and the next, the slowest among the world's advanced economies, the International Monetary Fund said last week.
Italy's growth has trailed the European Union average for more than a decade. Unemployment is rising and the inflation rate reached an 11-year high of four per cent in June, cutting into the buying power of consumers.
A sub-index measuring optimism about the broad economic situation dropped to a 14-year low of 72.2 from 81.6, Isae said today in its report. A gauge of households' perception about their short-term prospects decreased to 88.4 from 97.6.
Italians are cutting back on spending on everything from new cars to going out to dinner, Isae said. Retail sales declined for the 16th consecutive month, the Bloomberg purchasing managers index showed on June 27.
Sales in Europe's second-biggest car market fell 19.5 per cent in June, a sixth straight monthly decline.
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