Has food inflation lost its bite?

20 October 2026

By Elena Bobeica, Gerrit Koester, Friderike Kuik and Christiane Nickel^[1]

The puzzle of falling food inflation

Since the start of 2026, headline inflation increased from 1.7% in January to 3.8% in September (Chart 1, panel a). This increase was driven mainly by energy commodity prices rising sharply after the start of the conflict in the Middle East, which pushed consumer energy inflation to 18.9% in September.

At the same time, food inflation fell from 2.6% in January to 1.1% in August, its lowest level since mid-2021, before edging up to 1.3% in September, a move we come back to further below. How does this square with everyday experience at the supermarkets and what is driving these trends?

First of all, the inflation numbers show that the rate at which food prices are rising has slowed considerably, although the level of food prices has still gone up overall.

As for drivers, if we start by looking at the main food items, we see that food inflation has decreased across the board, but some items stand out (Chart 1, panel b). For example, coffee, chocolate, fruit and dairy products, which had recorded strong price increases in 2025, were contributing negligibly to total food inflation by September 2026.^[2]

Chart 1

Euro area food inflation

a) Headline and food inflation	b) Components of food inflation	c) Drivers of food inflation
(annual percentage changes)	(annual percentage change, percentage point contributions)	(percentage point deviations and contributions)

Next, if we look more deeply into food supply chains, we see that low food inflation mainly reflects earlier favourable factors that are still feeding through into consumer prices (Chart 1, panel c). Last year, farm yields in Europe were generally good, with above-average harvests for crops such as cereals and oilseeds. In addition, prices on international markets for staples like coffee, tea, cocoa and sugar have fallen from their previously high levels. Good harvests and lower international prices have also lowered euro area farm-gate prices. Put together, these factors have kept food inflation low.

Low food inflation: here to stay?

Several upstream indicators suggest that pipeline pressures on food inflation are building again: a double shock from energy and extreme weather could reignite food price pressures.

Looking first at the energy shock: it takes time for energy prices to affect food prices. Although energy affects food production directly, higher energy costs also have a significant indirect impact on food production. Energy costs gradually spread through supply chains, affecting transportation, fertilisers, packaging and processing costs. These indirect effects can take several months to show up in consumer prices.

The recent energy shock is having a significant effect on energy producer prices at the initial stages of food production (Chart 2, panel a). It is also showing up in the producer prices of fertilisers, which have surged since the blockade was imposed on the Strait of Hormuz. Unlike the situation in 2022, the recent increase in fertiliser prices directly reflects disruption to supply, as well as higher energy costs.

At later stages of production, however, producer prices for food had not yet increased as of August because there tends to be a lag before they reflect changes in input costs.

The energy shock is not expected to feed through uniformly, as not all food products are equally exposed to higher energy costs and energy-intensive inputs. A strong impact is expected for products linked to energy-intensive farming. This includes cereals such as wheat, maize and barley, and downstream products like bread, pasta and other bakery goods. Transmission will extend further to animal feed, with higher prices for grains eventually feeding through to dairy products and meat.

Gas prices have risen less than they did in the aftermath of the pandemic. That said, they have still increased, especially since the summer. This matters for food prices because gas is an important input in food production, not least through fertiliser production. Higher gas prices can therefore raise production costs for crops such as cereals, oilseeds, fresh vegetables and potatoes, but they also increase heating costs for greenhouse-grown products.

Oil price increases, by contrast, affect food prices through transport and other indirect costs. These effects do not show up overnight and oil price shocks can take years to fully work their way through to food prices. Gas prices can take even longer: on average, changes in wholesale gas prices take months to reach energy bills and longer still until they have fully passed through to food prices (Chart 2, panel b).

Chart 2

Pipeline pressures and the pass-through of shocks

a) Pipeline pressures for food inflation in 2022 and 2026	b) Response of food inflation to oil and gas price shocks
(months since the start of the year, annual percentage changes)	(months after the shock, percentage points)

Weather is the second factor driving food inflation at the current juncture. Heat and drought hit crops at a critical stage of the 2026 season. Extremely dry and persistently hot conditions in 2026 across large parts of Europe (Chart 3, panel a) severely worsened prospects for agricultural supply in Europe. They will likely push food inflation higher in the coming year.^[3]

ECB staff estimates point to an effect in the order of 0.3-0.8 percentage points on euro area food inflation over the next year, although the impact will vary across countries and products.^[4] Weather effects are likely to show up faster than energy effects, as weather acts directly on the supply of unprocessed food.

In September, these effects seem to have started to kick in slowly, as food inflation increased to 1.3%. That small uptick from the August data came entirely from unprocessed food inflation, which rose to 4% in September. This was strongly driven by weather-sensitive vegetable prices (Chart 1, panel b), and likely already reflected some of the impact of the extreme summer weather. Processed food, the larger part of the basket, went down slightly to just 0.4%. This figure is still very low and is likely to stem from the past easing of food price pressures still feeding through, while recent increases in energy prices are not showing up yet.

Chart 3

Temperature anomalies in 2026 and outlook for food inflation

a) Agriculture exposure to temperature anomalies in the largest four euro area economies	b) Outlook for food inflation
(degrees Celsius)	(annual percentage changes)

So what do we expect to happen from now on? The recent ECB macroeconomic projections for the euro area, September 2026 see food inflation rising sharply to reach 3.4% in the third quarter of 2027, declining only after that (Chart 3, panel b). Higher energy costs and weather-related pressures are working their way through to the food chain, with the factors that previously kept food inflation low fading away. Additional pressures are coming from the ongoing El Niño, which is also pushing up food commodity prices. The current energy shock is different from the 2022 version. It is smaller in magnitude and so far driven more by oil and oil products than by gas. This lends support to the argument that food inflation will be more moderate than it was in 2022. Overall, the peak in food inflation is expected to be roughly one-fifth of that recorded after the start of Russia’s war against Ukraine. Importantly, demand is less strong now than in 2022, which means that it may be more difficult to pass higher costs on to food prices this time around.

In addition, there is still uncertainty around the outlook. New machine-learning models that also consider weather effects predict a more delayed reaction. At the same time, other short-term inflation projection models currently point to an even steeper increase than the latest ECB projections. What is, however, common to all models is an expected increase in food inflation over 2027. The exact path food prices take will be shaped by how energy shocks and weather conditions unfold.

There are mitigating factors that could cushion the impact on food prices. The EU produces a part of the fertilisers it consumes.^[5] Measures have been taken to support farmers facing soaring fertiliser costs in the EU.^[6] When it comes to the impact of weather, there are regional discrepancies. Western Europe was the region most severely affected by droughts and heatwaves over the summer, but in eastern Europe the picture was more mixed.

Why the shopping basket still feels expensive

Food prices have risen more than other prices since 2022. To some extent this is normal, since over the long run food prices tend to rise slightly faster than others. This is reflected by the upward-sloping yellow line in Chart 4, panel a, which shows food prices relative to the remainder of the inflation basket. However, the gap that opened up between 2022 and 2025 was exceptional and persistent.

Low food inflation over recent months closed a part – but not all – of this gap. Relative to non-food prices, food prices remain far above their pre-surge level and, according to the September ECB staff projections, this will remain the case.

Across euro area countries there are notable differences in food price dynamics since the inflation surge in 2022-23 (Chart 4, panel b). Food prices in the euro area as a whole are around 30% higher than at the end of 2021, but this conceals a range from around 24% in Finland to around 48% in Estonia. This suggests that food affordability issues also vary across countries.^[7]

Chart 4

Relative prices and food price increases since the 2022-23 inflation surge

a) Price level of food items relative to non-food items	b) Food price increases across euro area countries
(ratio, December 2019 = 1)	(percentage changes vis-à-vis end-2021)

Food inflation has recently been less dynamic compared to other products, especially energy, but the shopping basket is still more expensive than it used to be. This is also reflected in the purchasing power of households (Chart 5).

Wage dynamics help put inflation into perspective. When headline inflation is considered, real wages (i.e. wages adjusted for inflation) are back to their pre-inflation surge levels. That is because wage growth has been close to overall price increases since then (first two bars in Chart 5).

When we look specifically at what wages can buy in terms of food, however, the picture is different: purchasing power is still below its pre-inflation-surge level. In other words, wages have recovered but the food shopping basket has become more expensive. This is particularly visible in frequently bought items (coffee, sugary products and chocolate, milk and dairy, meat etc.). This explains why food affordability continues to raise concerns. A new Eurobarometer survey released on 22 September 2026 found that 55% of Europeans see reasonable food prices as a top EU priority.

It is too early to assume that food inflation has lost its bite. With pipeline pressures building and the summer's weather yet to feed through, food prices look set to pick up again and, because people buy food frequently, food prices weigh heavily on how inflation is perceived.^[8] That is why prices of bread, milk and chocolate remain relevant for monetary policy.^[9]

Chart 5

Affordability of food

Increases in wages, headline HICP, food HICP and selected items since December 2021
(percentage changes vis-à-vis end-2021)

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