After months of relief at the checkout, European shoppers may face renewed pressure on their grocery bills. Eurozone food inflation has fallen to 1.6% year-on-year as of June 2026, the lowest reading since mid-2021, according to Eurostat. But economists warn that this reprieve could be short-lived, as a combination of extreme summer heat and the delayed impact of higher energy and fertiliser costs begins to feed through the supply chain.
Weather, Not War, Is the Bigger Threat
Analysts at Oxford Economics and Deutsche Bank point to this summer's heatwaves across the continent as a more significant driver of future food price increases than the recent Iran conflict. Oxford Economics estimates that the weather effect alone could add up to one percentage point to eurozone food inflation in 2027. “We think this summer's heatwaves will be a stronger upward driver of food prices next year than the war,” the economists write in a report.
Damage to crops is already considered unavoidable, and further heatwaves could reduce harvests further. A strong El Niño-Southern Oscillation (ENSO) may also be intensifying extreme conditions, compounding the risk for farmers from Spain to Poland.
Delayed Shock from Energy and Fertiliser
Food prices typically respond with a lag because higher energy and fertiliser costs are first absorbed by farmers before being passed on to processors, wholesalers and eventually supermarkets. The Iran war sent Brent crude oil from around $72.50 a barrel to a peak of $118, before it settled near $83 after the ceasefire. Urea, a widely used nitrogen fertiliser, also spiked sharply before retreating.
Deutsche Bank finds that the March–June commodity shock could still lift food prices by around 1.3% in the UK and 0.8% in the euro area over the next year, adding roughly 0.1 to 0.15 percentage points to overall inflation. Oxford Economics estimates the commodity shock alone could add about 0.5 percentage points to eurozone food inflation over the next 12 months, with unprocessed food affected sooner than processed products.
“The fertiliser shortage due to the Strait of Hormuz blockade and the surge in prices has been less severe than anticipated, but it will impact farm yields,” said Senior Economist Tomas Dvorak and Lead Economist Ricardo Amaro of Oxford Economics.
Current Relief Driven by Strong Harvests
For now, several factors are keeping food inflation subdued. A strong grain harvest in 2025 and an oversupply of raw milk have reduced dairy prices. Earlier global shocks have also eased: chocolate, cocoa and coffee prices have stabilised after surging in 2025, while olive oil prices continue to fall from their record highs in 2022. Lower energy costs have also reduced food processing costs.
Almost half of food items have become cheaper over the past three months, while only around 20% recorded price rises above 2%, according to Oxford Economics. Meat prices, although easing from last year's peak, remain the largest contributor to food inflation.
Oxford Economics has lowered its forecast for food, alcohol and tobacco inflation to 2.1% in 2026. “But we think food price inflation is still poised to accelerate, just with a longer lag than we previously assumed,” the report says.
Outlook for 2027
Oxford Economics expects eurozone food inflation to rise to around 3% in 2027, from 1.6% in June 2026. Higher energy, processing and packaging costs could add 0.5 to 0.7 percentage points, with unprocessed food responding faster than processed products. The summer heatwaves could add up to another one percentage point.
Deutsche Bank cautions that renewed tensions in the Middle East have pushed energy prices higher again, raising the risk of further inflationary pressure. While oil and fertiliser prices have fallen from their peaks, the bank notes that futures markets point to a gradual decline in the coming months — but a renewed conflict could change that outlook.
The broader inflation picture remains a key concern for European policymakers. As central banks face a credibility test over the timing of rate cuts, any resurgence in food prices could complicate the European Central Bank's efforts to keep inflation anchored. Meanwhile, Spain's inflation steadied at 3.2% in June, illustrating the uneven nature of price pressures across the eurozone.
For now, European consumers can enjoy lower prices at the supermarket. But the combination of extreme weather and delayed commodity shocks suggests that the relief may be temporary.
