A disproportionate surge in the prices of just a few key items, including coffee, cocoa, and meat, is continuing to fuel food inflation across the eurozone and shape consumer expectations, according to a new analysis by the European Central Bank (ECB).
The report, titled “Inside the food basket: what is behind recent food inflation?”, reveals that while overall inflation has shown signs of stabilisation, a small group of products has exerted a massive influence on the cost of living. In the final months of 2025, categories such as coffee, tea, cocoa, sweets, and meat accounted for over 50% of the annual food inflation rate, despite representing less than 25% of the weight in the Harmonised Index of Consumer Prices (HICP) food basket.
The climate change surcharge
ECB economists Colm Bates, Friederike Kuik, Elisabeth Wieland, and Zivile Zekaite attribute much of the pressure to extreme weather events. Commodity prices for cocoa and coffee reached historic peaks in early 2025, more than doubling since January 2024. Although these commodity costs have slightly retreated, the time-lagged pass-through to retail shelves means consumers are only now feeling the full impact.
The analysis warns that climate change is becoming a structural driver of food costs:
- Heatwave impact: The ECB estimates that the severe heatwave of the 2025 summer could independently push up unprocessed food prices in the euro area by 0.4 to 0.7 percentage points over the next year.
- Meat supply constraints: European meat prices—specifically beef—hit a peak in June 2025, standing 17% higher than in January 2024. This surge is blamed on a structural decline in supply coupled with resilient demand.
Outlook for 2026
Looking ahead, the Eurosystem’s December 2025 macroeconomic projections offer some relief for households. Food inflation is expected to decline in the short term, forecasted to reach 2.1% by the third quarter of 2026 and remain at moderate levels thereafter.
However, the report notes a growing divergence in expectations:
- Manufacturers: Selling price expectations among food and beverage producers have fallen below the long-term historical average (1999–2019), suggesting a cooling of factory-gate prices.
- Retailers: Conversely, price expectations among food retailers remain elevated. This persistence is partly attributed to high wage growth in the service and retail sectors, which continues to put upward pressure on the final price tag at the checkout.
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