A new report is bad news for the IT industry, finding that inflation is outpacing IT spending by a significant margin.

The IT industry, along with every other, is struggling with an economic downturn, with inflation increasing at near record highs. While IT spending is increasing, it’s not keeping pace with rising inflation.

Gartner surveyed more than 2,000 CIOs to gain insight into the state of IT spending. The survey found that, on average, CIOs expected their IT spending budgets to increase by 5.1% in 2023, but that’s behind the estimated inflation rate.

“The pressure on CIOs to deliver digital dividends is higher than ever,” said Daniel Sanchez Reina, VP Analyst at Gartner. “CEOs and boards anticipated that investments in digital assets, channels and digital business capabilities would accelerate growth beyond what was previously possible. Now, business leadership expects to see these digital-driven improvements reflected in enterprise financials.

“CIOs expect IT budgets to increase 5.1% on average in 2023 – lower than the projected 6.5% global inflation rate. A triple squeeze of economic pressure, scarce and expensive talent and ongoing supply challenges is heightening the desire and urgency to realize time to value.”

To help combat the trend, Gartner said CIOs must prioritize spending in the right sectors, such as

“CIOs must prioritize digital initiatives with market-facing, growth impact,” said Janelle Hill, Distinguished VP Analyst, Gartner. “For some CIOs, this means stepping out of their comfort zone of internal back-office automation to instead focus on customer or constituent-facing initiatives.”

“Leading CIOs are more likely to leverage data, analytics and AI to detect emerging consumer behavior or sentiment that might represent a growth opportunity,” added Hill.