Bank of Italy, survey on businesses and inflation: expectations of further price rises linked to raw materials
Despite an improvement in economic sentiment, businesses are forecasting rising costs and difficult operating conditions, with investment on the rise but challenges for small businesses
Key points
According to the Bank of Italy’s survey, carried out between 25 August and 18 September 2026 amongst Italian industrial and service sector firms with at least 50 employees, in the third quarter, negative assessments of the general economic situation eased, although they remained more pessimistic than those recorded before the outbreak of the war in the Middle East.
The impact of Hormuz
For Italian businesses, the conflict and the closure of the Strait of Hormuz have had a limited impact on demand for goods and services, but a significant impact on the costs of production inputs. This is highlighted by the Bank of Italy in its survey on inflation and growth expectations for the third quarter. Investment plans for 2026 remain expansionary, although investment conditions are assessed as generally unfavourable, particularly by small businesses. Inflation expectations remain broadly stable. Over the next 12 months, businesses expect further increases in their selling prices, linked primarily to commodity prices.
Exports as a driving force
As stated in the Bank of Italy survey, ‘overall demand for their products or services has generally remained positive, with weaker assessments in manufacturing in the strict sense and a substantial holding of ground in services and construction’. Sales were driven primarily by the export sector, however, “against a backdrop of a decline in domestic sales”.
Outlook for the fourth quarter
“The outlook for their own operating conditions in the fourth quarter remains unfavourable, whilst the outlook for total demand and its external component remains positive and is accompanied by an expected rise in employment, albeit at a marginally slower pace than that recorded in the same period last year.”
The high cost of living
Selling prices continued to rise across all sectors, with the trend compared with the previous survey remaining broadly stable in manufacturing and services, and more moderate in construction. Businesses expect further increases over the next twelve months, linked primarily to raw material prices: the majority of firms affected by price rises attributable to the conflict report that they have passed these on, either in part or in full, to their own prices. Inflation expectations remain broadly stable, with a slight reduction over the shorter-term horizons compared with the figures reported in the previous quarter.
