After years of almost nonexistent if not negative inflation (so-called deflation), the recent rise in prices, with rates of increase rising exponentially, is back in the spotlight causing concern.
The recent inflation trend
In Italy, according to preliminary estimates conducted by Istat, the national index of consumer prices for the entire community (NIC), before tobacco products, rose 0.8 percent month-on-month and 8.4 percent year-on-year in August.
Analyzing this upward trend, Istat points out that “It is free market electricity and gas that are producing the acceleration in prices of unregulated energy goods (partly mitigated by the slowdown in fuel prices) and, with processed food and durable goods, are pushing inflation to a level not seen since December 1985 (when it was +8.8 percent).”
The main causes of the inflationary phenomenon
The first component to consider regarding the inflationary phenomenon we are experiencing is the effects that the Covid-19 pandemic has brought on the supply side. The shutting down of production facilities on a global scale has curbed, if not stopped altogether, the generation of intermediate goods, with a resulting reduction in output in various industries resulting in greater demand than supply and rising prices.
The second is the significant increase in prices of energy resources, primarily gas, greatly caused by the outbreak of the conflict in Ukraine and raw materials.
Analyzing the phenomenon on a global scale, it can be seen, moreover, that what has pushed up prices, especially in the U.S., has been the rising demand for goods and services. Thanks, in fact, to the expansive fiscal policies implemented by governments to support families and the money involuntarily saved during lockdowns by consumers, there was a sudden increase in demand that, not being matched by supply, led to higher prices.
Inflation as an element of growth
In the current scenario of profound uncertainty, the role of businesses becomes crucial in pushing the economy forward while avoiding recession.
Entrepreneurs, as Professor Sergio Terzi an industrial engineer at the Milan Polytechnic emphasizes, must show proactivity and “businesses must hold on and take advantage of the expansive possibilities that Europe and the Italian state are transferring to us to make investments” by turning the inflationary phenomenon into an element of growth.
Investment in digital and ecological transformation by enterprises
In a somewhat complex environment, entrepreneurs can offer a solution to avoid stagnation and foster economic growth by advancing along the path of research and investment.
In this regard, Professor Terzi points out, “Italian industry can give a strong signal if entrepreneurs do not stop investing in the dual digital and ecological transformation for fear of inflation, creating a trickle-down effect for the rest of the economy.”
Automation as an investment priority to counter inflation
According to the analysis conducted by Gartner in July 2022, 98 percent of CFOs surveyed, out of a sample of 226, will confirm or increase their annual budget directed toward automation and analytics technologies.
Going on to analyze the study, 98 percent of Cfos confirmed that among investment expenditures in the next twelve months, digital acceleration takes precedence in corporate strategic choices, specifying that cuts will be made on different types of expenditures if necessary.
In the current scenario, IT automation and Industry 4.0 technologies that can support productivity and cost optimization appear to have become not only a resource for companies to exploit but the priority.
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