Italy’s poor suffer from soaring energy costs

Newsletter: Europe Express

Maria Grazia Zingarello couldn’t believe her ears when the Italian government warned that electricity bills could rise by 40% over the next three months.

“If the prices go up further, I won’t know where to turn,” said the 49-year-old Milanese babysitter, who is already struggling to pay her rent, bills and food. “I often look at the calendar and think I won’t get to the end of the month.”

Her monthly salary of around € 1,000 is the only stable income in the small apartment she shares with her two daughters and two grandchildren.

The family illustrates why governments across Europe are increasingly alarmed by soaring gas and electricity costs. They are discussing billions of euros in emergency packages to try to protect households, as well as small businesses that have struggled to stay afloat during the coronavirus pandemic.

On September 23, Italian Prime Minister Mario Draghi unveiled a € 3 billion plan to mitigate rising energy prices, aimed at helping poorer households and small businesses pay their bills.

The plan freezes gas and electricity bills for up to 3 million homes. Fixed fees for all families and 6 million small businesses will be removed, and the value-added tax rate on natural gas will drop from 22% to 5% in the fourth quarter.

Speaking to the country’s business confederation on Thursday, Draghi said the move had “strong social value.” His government has already spent 1 billion euros to intervene directly in the energy market in order to reduce consumer prices.

Italy covers more than two-thirds of its energy needs with imports and gas represents more than half of the country’s residential energy consumption, much more than in France, Spain and Germany. This means that soaring gas prices are quickly fueling higher bills.

Consumer energy price inflation in Italy reached an annual rate of 20 percent in August, the fastest rate in almost 40 years and faster than the euro area’s 15.4 percent .

Italians spend proportionately more of their income on electricity, gas, and other housing costs than the rest of the euro area, so rising energy prices have a big impact on household spending, especially for households. low income people.

Rising energy costs “are forcing the poorest families to give up their basic needs,” said Isabella Catapano, CEO of Albero della Vita, a poverty alleviation charity. “Bills are a fixed cost, a necessity that must be paid. Thus, families are gradually forced to spend less on other things, such as quality food or educational and recreational activities for their children.

Italy’s unemployment rate is still above 9%, more than double that of Germany, and in 2020, around 5.6 million people were considered to be living in absolute poverty.

High energy costs are also hitting businesses, with industrial product prices soaring at an annual rate of 12.3% in August, compared to less than 1% at the start of the year.

Silvia Barbati, 37, who runs a local gym in Rome’s Trieste district, fears price hikes only mean the sacrifices made by small businesses like hers during two years of intermittent pandemic shutdown were in vain.

“Our activities have already been drastically reduced during Covid and we are now trying to get back on our feet. I hope that the next bills will not be very high, ”she said.

Many families and small businesses fear they will not stay afloat, said Paolo Peroso, president of Amici di Porta Pia, a merchant association in central Rome.

“There is a lot of confusion and fear right now. . . bills that could suddenly be 30 or 40% higher than usual is absurd, ”he said. “It might be hard to absorb, especially for those who have to keep display cases, lights or refrigeration on all day. Some fear that they will not be able to do it this time around.

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