Italy sees no need for new anti-inflation package as energy prices fall, sources say

By Giuseppe Fonte

ROME (Reuters) – Italy does not plan to extend most of the measures it has adopted to soften the impact of energy costs on households and firms beyond this month, two government sources familiar with the matter told Reuters.

The country’s right-wing administration earmarked around 26 billion euros ($28.39 billion) in the first half of this year to fund measures mostly designed to cut electricity and gas bills.

But a recent fall in energy prices makes the economy ministry confident there is no need for a new, substantial aid package, the sources said, asking not to be named due to the sensitivity of the matter.

Italy’s regulated household gas prices fell 0.2% in May compared to the previous month, the country’s energy authority said this month.

The Dutch June gas price hovers around 37 euros per megawatt hour (MWh), sharply down from 73 euros in early 2023 and from a peak of around 340 euros/MWh in August 2022, when Russian gas pipeline supplies dwindled following Moscow’s invasion of Ukraine.

Rome, however, may renew a bonus adopted to cut energy bills for low-income households, one of the sources said, using part of the funding initially set aside and not fully spent.

Other measures already financed, such as a flat-fee bonus to subsidise heating costs for families, are planned to take effect later this year.

Prime Minister Giorgia Meloni’s administration is gradually phasing out the expansionary fiscal policy adopted since 2020 in the wake of the COVID-19 pandemic.

New European Union budget rules proposed by the European Commission also increase pressure on Rome to maintain a cautious approach to state finances.

The finance ministry at this stage is focusing on ways to help borrowers hit by higher interest rates set by the European Central Bank (ECB) to curb inflation, the second source said.

While a levy on banks’ profits has been put on hold for now, Rome expects to collect more than the 2.6 billion euros from a windfall tax on energy companies introduced in this year’s budget.

($1 = 0.9158 euros)

(Editing by Christina Fincher)