Italy's fuel prices fall slightly but still above cap set by Eni

ROME, Sept 28 (Reuters) - Italian fuel prices dropped slightly on Monday, but remained above the cap of €1.99 for petrol and €2.19 for diesel announced last week by state-controlled energy group Eni.

Italy's industry ministry said self-service prices at petrol stations were €2.152 per litre on Monday, from €2.159 on Sunday, for gasoline and €2.369, down from €2.377, for diesel. Prices on highway networks were €2.214 for petrol and €2.420 for diesel.

"Despite Eni's extensive distribution network, the impact on national averages was quite small," Italy's National Consumers Union said in a statement.

State Oil Company of Azerbaijan, which owns Italiana Petroli (IP), also said on Sunday it would "progressively" implement a cap, without disclosing its new prices.

The rise in energy and consumer prices due to the Middle East conflict has been a major headache for Prime Minister Giorgia Meloni, who has tried to shield households and businesses while keeping Italy's strained finances in check.

Meloni's administration has repeatedly renewed temporary cuts in fuel excise duties in recent months, spending around €2.8 billion, when also including tax breaks for truck drivers.

The government's latest cut, which is set to expire on October 5, only covers diesel and was reduced on Saturday to around 6 cents per litre from 12 cents.

Analysts said the cap could persuade Rome to back off mooted plans to introduce a domestic windfall tax on energy companies.

Economy Minister Giancarlo Giorgetti has said he would prefer a coordinated European Union move but has not ruled out such a tax as he prepares next month's 2027 budget.

(Reporting by Giuseppe Fonte, editing by Gianluca Semeraro and Alexander Smith)