Italy preparing stimulus package worth up to $13.3 billion, Treasury official says

Business

Italy is preparing a new stimulus decree worth up to 13 billion euros ($13.3 billion) to help families and firms deal with a surge in electricity, gas and petrol costs, deputy Economy Minister Laura Castelli said on Monday.

The new scheme, which comes on top of some 33 billion euros already budgeted since January, is expected to be one of the last major acts by Prime Minister Mario Draghi, who last week resigned paving the way for a snap national election on Sept. 25.

Among the measures being studied, the government could make essential consumer staples such as pasta and bread temporarily exempt from VAT sales tax, Castelli told broadcaster Radio 24.

Other measures include subsidising energy supplies for low-income families and energy-intensive enterprises, the deputy minister added.

The package will be funded by savings or higher revenues elsewhere in the state budget and so will not weigh on the public deficit, Castelli said.

Draghi said last week in a speech to the upper house that a new package of measures would be passed to help offset the impact of rising prices.

Italian EU-harmonised consumer prices index (HICP) stood at 8.5% in June, up from the 7.3% increase in May.

Core inflation (net of fresh food and energy) was running at +3.8% year-on-year on the HICP index in June, up from 3.2% in the month before.

“Inflation has never been so high since 1986. This is a phenomenon that greatly erodes the purchasing power of Italians,” Castelli said.

($1 = 0.9801 euros)