Italian consumer mood sours

ROME, Italy -- The mood among Italian shoppers is continuing to sour, with high inflation and rising unemployment pushing consumer confidence to the lowest level in five years.

The monthly index of consumer morale -- based on a survey of 2,000 households and adjusted for seasonal factors -- fell to 111.8 in September from 112.7 the previous month, the state-funded ISAE institute said on Thursday.

ISAE, which releases its findings at the middle of each month, said the September reading of consumers' mood was the weakest since July 1997. It was also lower than most economists has expected.

Italian shoppers have been delaying purchasing big-ticket items -- such as cars and household appliances -- due to a jump in retail prices following the introduction in January of a single currency in the 12-nation eurozone.

ISAE said 84 percent of people surveyed between September 2-16 believed prices had increased by a moderate to hefty rate in the past 12 months, up from 83 percent in August.

The inflation rate in Italy -- the eurozone's third largest economy -- is running at 2.4 percent, above the region's overall level of 2.1 percent and more than twice that of Germany, the largest economy.

The Italian economy, which ground to a halt in 2001, grew by just 0.2 percent in the second quarter from a year earlier. The unemployment rate currently stands at 9.1 percent.

ISAE said 34 percent of those polled were worried about losing their jobs or having difficulty finding and new one, while the majority expressed concern about their personal finances.

However, the institute sees some hope that consumer confidence may soon begin returning. ISAE found that 46 percent of those surveyed in September said they expected prices to rise in the next year, down from 49 percent the previous month.