Ye s it is, but it is not caused by an item (that item doesn't exist), rather by the lack of an item, and only works on Pokemon who need an Incense to get the baby Pokemon, so it is not possible for a Pignite, ect to hatch from the egg.
For example, when you breed a Female Snorlax with the Full Incense as a held Item, then you will get a baby Munchlax. But if you don't let it hold the Full Incense, then the baby will be a Snorlax because the Incense is needed to get the first evolution.
Hope I cleared it up a little bit.
Source: Experience (Me is so smarticle :D)