Summary: Italy's cabinet is scheduled to convene to debate policy steps aimed at curbing rising diesel prices, as the government seeks to shield consumers and energy-heavy industries while adhering to EU deficit-reduction commitments. The debate follows a temporary excise cut earlier in the year that expired on July 3 and drew criticism from international institutions.
The cabinet will meet at 1530 GMT to consider measures focused on diesel, according to unnamed government officials. Officials said additional actions are expected on August 4. The discussions come amid upward pressure on energy and consumer prices attributed to the Middle East conflict, which has complicated the government's task of supporting household purchasing power and energy-intensive sectors without jeopardizing its agreed path to reduce the deficit with the European Union.
Earlier this year, in response to the energy shock stemming from the Israel-Iran conflict, Italy introduced a temporary excise duty cut on diesel and petrol. The relief measure was implemented in March, extended and gradually tapered several times, and ultimately expired on July 3. The government estimated the measure cost state finances nearly 2 billion ($2.28 billion).
The European Commission and the International Monetary Fund voiced criticism of the excise duty reduction, arguing that Italy should have used more targeted measures to shield the most vulnerable households rather than broad-based cuts.
On the ground, fuel price data released by the industry ministry on Monday showed higher pump prices across Italy's self-service stations on the national road network. Average prices stood at 1.982 per liter for petrol and 2.185 per liter for diesel, up from 1.803 and 1.882 respectively on July 3.
As the cabinet weighs new options, policymakers face the trade-off between immediate relief for consumers and energy-intensive businesses and the need to remain on an agreed fiscal consolidation track with EU partners. The government has signaled it will try to reconcile those objectives at the meetings scheduled for this week and early August.
Details in this report are based on government statements and industry ministry pricing data released on Monday.