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Italy eyes cut in excise duties as anger grows over fuel prices

FILE PHOTO: Italian Economy Minister Giorgetti at news conference in Rome

By Giuseppe Fonte

ROME (Reuters) - Italy may cut excise duties to curb rising fuel prices, its economy minister said on Thursday, in the face of mounting public anger that could pose the first major challenge for nationalist Prime Minister Giorgia Meloni.

Meloni swept to power in a resounding election victory in September, which was followed by rising poll numbers.

Addressing parliament, Economy Minister Giancarlo Giorgetti said the government would monitor price levels in order to verify whether the current trend was determined by "external shocks or speculative behaviour".

According to data from the ministry for the environment and energy security, the average price of petrol last week was 1.81 euro ($1.96) per litre and 1.86 euros per litre for diesel, up from 1.63 euros and 1.68 euros respectively two weeks earlier.

Prices rose after the government cancelled a cut in excise duties first introduced by Meloni's predecessor Mario Draghi in the first half of 2022, when the price of petrol exceeded 2 euros per litre.

However, Giorgetti told lawmakers the government reserved the right to cut excise duties again "in relation to any verified increase in fuel prices".

A day earlier, Meloni defended the decision not to extend the price rebate on fuel prices, saying it would have cost 10 billion euros, and indicated the available resources would instead be spent on more targeted measures for the poor.

In Italy, more than 50% of the price of petrol and diesel comprises excise duties and VAT sales tax.

The Italian budget for this year has earmarked over 21 billion euros to help firms and households pay electricity and gas bills, mainly through subsidies for energy-intensive firms and low income families.

Giorgetti said Rome was studying additional relief measures, including a temporary cap on prices under the so-called "two-tier approach" laid out by the European Commission.

"This cap, by providing for a capped price below a certain percentage of consumption and leaving the price of the remainder to the market, has the advantage of reducing overall consumption," Giorgetti said.

Former Prime Minister Giuseppe Conte, leader of the opposition 5-Star Movement, said he expected a popular uprising against rising fuel prices, similar to the "yellow vest" movement that swept France in 2018.

($1 = 0.9247 euros)

(Editing by Alvise Armellini and Mark Potter)