Each item requires only one square. However some smaller items such as scrolls and potions are stacked, which means that multiple items of same type can be stored in the same square (probably up to five each). The inventory can also be extended with four additional bags, these can either be found or bought in the game. When you start the game (without any bags), you will have 12 slots, but with four large bags, you will be able to get up to 30 squares.
