Italy faces economic pressure from energy and food inflation

Geopolitical instability, specifically conflicts involving Iran and the closure of the Strait of Hormuz, is driving significant economic pressure across Europe and the global agricultural sector. The OECD reports that real wages in Italy are projected to fall by 0.9 percent in 2026, as inflation erodes purchasing power.

In the agricultural sector, Massimiliano Giansanti, president of Confagricoltura, warns that farmers are increasingly operating at a loss. Rising energy and fertilizer costs, combined with climate change and war-related disruptions in grain shipments from Russia and Ukraine, are creating a crisis of food inflation. Giansanti has called for European-level interventions to protect the strategic importance of agriculture.

In Italy, the energy impact is substantial. Estimates suggest the country has spent approximately 11.6 billion euros on increased fuel and electricity costs due to the conflict between the US, Israel, and Iran. Additionally, the Mediterranean is regaining geopolitical importance as a potential energy hub amidst global oil supply volatility.