No. 1501 - The pass-through of cost shocks to firms' prices and profits

Temi di discussione (Working papers)
by Fabio Parlapiano
October 2025
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The sharp increase in the prices of intermediate goods and energy recorded after the Covid-19 pandemic has sparked debate over firms' pricing policies and their possible role in fuelling inflation. This study analyses the financial statement data and pricing strategies of Italian firms over the period 2016-23 to measure the contributions of changes in both prices and quantities to the growth rates of value added and operating profits.

During the sample period, the pass-through of intermediate input price increases to final output prices was partial on average. The strong growth in value added observed after the pandemic was primarily driven by increases in quantities sold. In this phase, only the largest firms improved their profit margins, showing a greater ability than other firms to pass on the rise in input prices to final prices.

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  1. 13 October 2025
    No. 1501 - The pass−through of cost shocks to firms' prices and profits
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