According to preliminary data from the Italian National Institute of Statistics (Istat), consumer price inflation in Italy increased to its highest level in five months, in February 2026; it rose from 1% in January to 1.6%. Meanwhile, the construction production index had been registering volatile data. According to the Istat, the construction production index rose by 5.3% year-on-year (YoY) in December 2025, following a YoY growth of 2.5% in November and 7.3% in October 2025. Overall, growth in the average construction production index slowed from 6.5% in 2023 to 5.2% in 2024 and 3.9% in 2025.
The industry’s output in 2026 is expected to be affected by weakness in the residential construction sector, amid a substantial drop in residential construction activity, due to the definitive cessation of the “Superbonus” tax incentive on 1 January 2026. The credit scheme, which had previously allowed homeowners to claim 110% of renovation costs, was slashed to 70% in 2024 and further to 65% in 2025. The 110% Superbonus has officially ended as of January 2026 and has been replaced by lower-rate deductions. Apart from the cessation of Superbonus schemes, high interest rates, falling building permits, and rising construction costs are also expected to impact the Italian construction industry’s output in 2026.
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According to the Istat, the construction cost index for residential buildings rose by 2.3% YoY in December 2025, following YoY growths of 2.1% each in the preceding two months. In annual terms, the average construction cost index for residential buildings rose by 1.8% in 2025, following a marginal annual fall of 0.1% in 2024 and a growth of 2.1% in 2023. The rising construction costs for residential buildings is due to rising construction material and energy prices, which are primarily impacting new homes. The war in the Middle East is expected to lead to a further increase in energy prices, thereby aggravating the construction sector.
Despite weakness in the residential construction sector, however, investments in civil engineering works are expected to provide some respite to the Italian construction industry in 2026. This can be reflected by an improvement in the construction confidence index in Italy in February 2026, with mixed signals registered across sectors. According to the Istat, confidence in the construction industry rose by 3.3% month-on-month (MoM) in February 2026, following MoM falls of 2.9% in January 2026 and 1.9% in December 2025. This improvement is due to a rise in sentiment in the civil engineering works and specialised construction activities.
By segments, confidence in specialised construction activities rose by 5.8% MoM, while that in civil engineering works rose marginally by 0.8% MoM in February 2026. This improvement is due to investments in projects linked to Italy’s Recovery and Resilience Plan, whose formal deadlines are scheduled for 31 August 2026. Amid significant scaling back of fiscal incentives for residential renovation, construction confidence in the buildings sector fell by 2.4% MoM in February 2026, following a MoM fall of 2.7% in January 2026. In cumulative terms, confidence in the construction industry fell by 2.2% YoY in the first two months of 2026, from 102.3 in January – February 2025 to 100 in January – February 2026. By segments, it rose by 1.5% YoY for specialised construction activities, while it fell by 2.8% YoY for civil engineering works and 10.5% YoY for building construction activities.
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