Italian consumer morale dips in March after election

ROME, March 25 (Reuters)- Italian consumer confidence fell in March with sentiment on the general economy and personal finances declining after inconclusive national elections last month, data showed on Monday.

National statistics bureau ISTAT's headline consumer morale index fell to 85.2 in March from 86.0 in February.

The result was slightly lower than the average forecast in a Reuters survey of 13 analysts which pointed to a reading of 85.5. Forecasts spanned 84.0 and 87.0.

Consumers are struggling through Italy's longest recession for 20 years, with the economy contracting in every quarter since the middle of 2011.

Tax hikes introduced by Mario Monti's outgoing 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.

Elections at the end of February threw Italy into political chaos, with no clear parliamentary majority emerging. Democratic Party leader Pier Luigi Bersani is in talks with parties this week to see if he can form a government.

ISTAT's consumer confidence survey showed the sub-index measuring sentiment on the economy fell to 68.8 in March from 72.7 while sentiment on respondents' personal finances dipped slightly to 91.4 from 91.7.

The sub-index on the current situation slipped to 89.2 from 91.1 while the index on the future outlook rose slightly to 80.2 from 79.9.

Consumer spending has long been an achilles heel of the Italian economy, which has been among the most sluggish in the euro zone for at least a decade.

Economy Minister Vittorio Grilli said last week the economy would contract by 1.3 percent this year, compared with a previous forecast of -0.2 percent.

Analysts say ISTAT's consumer confidence index shows little immediate correlation with spending patterns, though it does reflect longer term trends.

(Reporting by Catherine Hornby) ([e-mail] + 39 06 8522 4232))