Bank of Italy survey finds easing inflation expectations and continued gradual improvement in firms’ outlook

The Bank of Italy published its 2025 Q4 Survey on Inflation and Growth Expectations, indicating that Italian firms’ assessments of the general state of the economy continued to improve gradually and that consumer inflation expectations declined across all time horizons. The survey, conducted between 20 November and 16 December 2025 among industrial and service firms with 50 or more employees, reports more favourable assessments and expectations for domestic and foreign demand than in the previous round, except in construction. Firms’ 12-month wage growth expectations stand at around 2 per cent on average, business conditions for the next three months improved slightly, and employment is expected to keep rising over the next three months. Investment conditions were less unfavourable overall, with a slight improvement in industry excluding construction and in services but a worsening in construction; nominal investment spending for 2026 is expected to increase year on year, and a significant share of manufacturing firms reported using the Transition 4.0 and Transition 5.0 incentives. Growth in firms’ own selling prices eased slightly, with expected price growth over the next 12 months remaining moderate, while inflation expectations ranged from 1.6 to 1.8 per cent.