Financial thoughts

Italian consumer confidence fell to the lowest in almost four years in March as rising prices and slowing economic growth sapped optimism in Europe's fourth- biggest economy.

The Rome-based Isae Institute's index, based on a survey of 2,000 families, fell to 99 from a revised 102.8 last month. The reading was lower than the median forecast of 102.4 by 17 economists in a Bloomberg News survey. Today's reading is the lowest since May 2004.

Italians have been cutting back on their spending, which makes up two-thirds of the $2 trillion economy, as a surge in the cost of food and transportation curbs disposable income. ISAE predicts the Italian economy will grow as little as 0.5 percent this year, the slowest pace since 2003.

“Economic forecasts for 2008 continue to evolve, with negative indicators for consumer spending,'' Seat Pagine Gialle SpA Chief Executive Officer Luca Majocchi said on a March 19 conference call after the publisher of phone directories announced that sales fell in 2007 online payday loan.

A measure of optimism about the current economic situation plummeted to a 14-year low of minus 132 from minus 118, ISAE said. The number of Italians who are “very concerned'' about rising prices is at a four-year high.

Oil prices above $100 a barrel have driven the Italian inflation rate to 3.1 percent, the highest in 11 years, and saddled households with higher energy bills. Italian retail sales dropped in February for a 12th consecutive month, the Bloomberg purchasing managers index showed.

Complicating the economic climate is the current election campaign, which was triggered by the collapse of Prime Minister Romano Prodi's government in January after 20 months in power. Both leading candidates, two-time premier Silvio Berlusconi and former Rome Mayor Walter Veltroni, are promising tax cuts to help revive growth.

Source