The Recent Inflationary Wave: Impact on Different Industries and Solutions Adopted by Italian Firms

After years of low inflation, during which central banks were striving to avoid a deflationary situation, recent years have seen a strong rise in prices. This has impacted both consumers and companies, adversely affecting the climate of confidence that was beginning to build as the world emerged from the covid-19 pandemic, which had stalled economic activity for nearly two years. The particularity of the recent inflationary phenomenon is the fact that it was driven by several causes, in a context of recovery from a global crisis due to the pandemic and of geopolitical tensions that culminated in a war that is having negative effects on the economy. Inflation has risen in most advanced countries, presenting mostly similarities but also differences. Focusing on Italy, the aim of this paper is to analyse how price increases affect the various productive sectors differently, and what measures companies adopt in response. Indeed, the recent inflationary crisis, although global, had varying repercussions not only across different sectors but also among different companies, depending on the industry they operate in as well as their specific relationships with suppliers and customers. These factors, together with differing business conditions, have consequently influenced how companies reacted and the decisions they made in recent years to ensure business continuity. This work is based both on official statistical evidence and existing literature, and on the results of a field investigation conducted through face-to-face interviews with a set of firms. It was observed that the most affected sectors were food, chemicals, and wood-furniture, and that companies, despite the difficult geopolitical situation, chose not to change either the geographical destination of their products or the location of their factories by reshoring or nearshoring. They preferred instead to focus on internal processes.