Food inflation may rise again

Food inflation in the euro zone is expected to increase again in the coming years, according to a blog note published by the European Central Bank (ECB). The note suggests that the current period of lower food price growth may not last, despite recent declines.

Recent trends in food prices

Food inflation in the euro zone dropped from 2.6% in January to 1.1% in August, its lowest level since mid-2021, before rising slightly to 1.3% in September, with France at 1.6%. However, the ECB warns this slowdown might be temporary.

Reasons for the slowdown

The decline in food prices is partly due to good harvests in Europe and falling international prices for agricultural raw materials like coffee, cocoa, and sugar. These factors have contributed to a temporary easing of food inflation.

Emerging pressures in the food chain

Despite the recent decline, several upstream indicators in the food chain are showing renewed pressures. The energy shock from the Middle East conflict is starting to affect transport, fertilizers, packaging, and processing costs.

Impact of weather on food supply

Extreme heat and drought during the 2026 agricultural campaign have affected crops, reducing food supplies. The ECB estimates that weather effects alone could increase food inflation by 0.3 to 0.8 percentage points over the next twelve months.

Future food inflation outlook

The ECB predicts food inflation will rise to 3.4% in the third quarter of 2027 before declining. Despite the current lull, food prices remain about 30% higher than at the end of 2021, continuing to reduce households' purchasing power for food.

Disclaimer on the blog note

The ECB emphasizes that the opinions in the blog note are those of the authors—Elena Bobeica, Gerrit Koester, Friderike Kuik, and Christiane Nickel—and do not necessarily reflect the official position of the institution.