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Italian consumer confidence has hit new lows.

In surveys households said their confidence in both the current and future economic situations was weaker.

Economists had forecast that there would be a modest overall improvement.

The consumer confidence index slipped to the lowest level years since the surveys started 17 years ago.

The decline reflects political uncertainty in the recession-hit country, less than one month ahead of national elections.

“With confidence bouncing around record lows, cautious household spending will serve as a major obstacle to any recovery in economic activity during 2013-14,” said Raj Badiani of IHS Global Insight.

The eurozone’s third largest economy has been in recession since the middle of 2011 and most analysts expect gross domestic product to fall around one percent this year, following a contraction of around two percent in 2012.

Wages sliding against inflation

At the same time the national statistics institute said workers’ hourly wages were up 1.5 percent last year from 2011, just half the level of inflation, and the lowest average salary rise since 1983.

The negative gap between wages and consumer price inflation last year was the widest since 1995.

Declining purchasing power has hit consumer morale, causing what retail associations said was the deepest decline in consumer spending since World War Two.

Political uncertainty

Tax hikes introduced by Mario Monti’s technocrat government as part of tough austerity measures have helped calm investor fears about the sustainability of Italy’s huge public debt but have eroded purchasing power and deepened the recession.

Monti is running at the election at the head of a centrist coalition but he is lagging far behind both the centre-left and the centre-right blocs in opinion polls.

Monti is running at the election at the head of a centrist coalition but he is lagging far behind both the centre-left and the centre-right blocs in opinion polls.

The sub-indexes on current personal finances and overall future prospects both hit all-time lows, suggesting Monti’s frequent assurances that an economic recovery is in sight are not resonating with most ordinary Italians.

Consumer spending has long been an Achilles heel of the Italian economy, the most sluggish in the eurozone for at least a decade.

Copyright © 2014 euronews

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