Italian firms keep raising prices as demand holds firm
Banca d'Italia's Q3 2026 survey of Italian industrial and service firms with 50 or more employees shows improving but still negative sentiment on the economy, continued selling-price increases and a cautious outlook for the fourth quarter.
Foreign demand carries the load
The survey, conducted between August 25 and September 18, 2026, covers Italian industrial and service firms with 50 or more employees.
Negative opinions on the general state of the economy eased in the third quarter, though they remained worse than before the outbreak of the war in the Middle East.
Total demand for products and services stayed positive overall, with weaker assessments in industry excluding construction and more resilience in services and construction.
Sales growth was driven by foreign demand, while domestic sales weakened.
The conflict and the closure of the Strait of Hormuz had a limited effect on demand but weighed more heavily on production input costs.
A cautious fourth quarter
The outlook for firms' operating conditions in the fourth quarter remains unfavourable, though total demand and its foreign component are still expected to grow, with employment projected to rise at a marginally slower pace than a year earlier.
Investment plans for 2026 remain expansionary despite unfavourable investment conditions, particularly for small firms.
Credit access conditions stayed stable, and firms expect an adequate liquidity position overall.
Pricing power beats sentiment
The pass-through of Middle East-related cost shocks into selling prices suggests inflation pressures remain stickier than the mild improvement in sentiment implies.
Firms are absorbing geopolitical shocks through pricing rather than output cuts.
That dynamic, not the modest sentiment recovery, is the more telling signal for 2027.