Bank of Italy Sees 3.1% Inflation in 2026, Businesses Predict 2.4% Price Rise

The Bank of Italy (BoI) has forecast that the country's inflation rate will reach 3.1% in 2026, signaling persistent price pressures in the economy. The projection comes as businesses surveyed by the central bank expect a 2.4% increase in their own price indexes over the next 12 months. These figures indicate that inflation, while lower than recent peaks, remains above the European Central Bank's target of around 2%. The BoI's report reflects cautious optimism among firms, but also highlights ongoing challenges from supply chain costs, energy prices, and wage demands. Italy, like many eurozone economies, has been grappling with elevated inflation since 2022, driven by post-pandemic recovery and the Russia-Ukraine conflict. The central bank's forecast suggests that price growth will moderate only slowly, requiring continued vigilance from policymakers. Businesses' expectations of a 2.4% rise in their prices over the year ahead align with a gradual easing of inflationary pressures. However, the gap between the 2026 projection and the 12-month expectation underscores uncertainty about medium-term trends. The BoI's analysis will inform monetary policy decisions, as the ECB continues to balance curbing inflation with supporting economic growth.