(By Christopher Livesay) Rome, August 30 - Italy's worst recession in decades continues to pound the economy, according to disheartening data from the national statistics agency Friday that showed a stagnant unemployment rate above the European Union average. Istat said that joblessness was stuck at 12% in July for the fourth straight month, up 1.3% from July 2012. 585,000 jobs were lost in the second quarter, it said, keeping the rate 1% worse than the EU's 11%. In total, the number of people without a job in Italy hit 3.075 million in the second quarter. This was 370,000 more than the same period in 2012, a rise of 13.7%, the statistics agency said. More than half the unemployed are over 35 and 55.7% have been seeking work for a year or more. But those hardest hit continue to be Italian youth, a section of society where unemployment rose 0.4% to 39.5% in July, 4.3% higher than July 2012, Istat said. The 15-to-24-year-old jobless rate for the second half of 2013 was up an annual 3.4% to 37.3%. At the end of last month the Senate passed a government decree to combat rampant youth unemployment by giving businesses tax breaks if they make temporary work contracts for young adults under 30 permanent. Officials say the new decree could affect more than 190,000 small and mid-sized business, including about 54,000 operating in Italy's south, which has especially high unemployment. Some 51% of young women in southern Italy are out of work. Experts say unemployment numbers belie the true toll of the crisis, as many who are technically employed have only part-time or temporary jobs and would prefer full-time work. Earlier this month Istat reported that the number of Italy's underemployed grew by 154,000 people in 2012, up 66% since 2007. Nine out of 10 part-time workers said they would rather be working full-time, according to Istat. Yet even temporary contracts are dwindling, Istat said. The number temp workers slumped 7.2% in the second quarter of the year, as the decline of the first three months of 2013 became increasingly accentuated. Italy's longest recession since World War II wiped out some 209,000 short-term or unguaranteed-work contracts in the second quarter of the year. The total number of temp workers in Italy totalled 2.7 million in the period. Last week Premier Enrico Letta said that the fight against unemployment will be at "the heart of the Italian semester" when Italy assumes the presidency of the EU in the second half of 2014. The number of Italians suffering from some form of labor difficulty, from underemployment to unemployment, is nearly nine million, according to the Ires research group. On a positive note, Italian inflation fell from 1.2% in July to 1.1% in August, its lowest since December 2009, Istat said Friday. The drop was largely due to lower food and energy prices. The price of the 'trolley' of most frequently bought goods and services was steady between July and August, with an annual rise of 1.7%, compared to 2% in July, the statistics agency said.