Food Inflation in Eurozone Expected to Rise in 2027 as Lagged Effects of Energy Shock and Heatwaves Hit

Eurozone food inflation fell to 1.6% in June 2026, its lowest in five years, but economists warn the reprieve is temporary. Oxford Economics predicts a rebound to around 3% in 2027, driven by the delayed impact of the Hormuz blockade and extreme summer heat Source: euronewses.

Why the delay

The inflation lag stems from the time it takes for higher energy and fertilizer costs to travel through the supply chain. While Brent crude spiked to $118/barrel during the Iran conflict before settling near $83, food prices have not yet fully absorbed the shock. Deutsche Bank estimates the raw material shock alone could raise eurozone food prices by 0.8% over the next year Source: infobae. Urea fertilizer prices also surged but have partially corrected.

Extreme heat as a wildcard

Multiple analysts now view this summer's heatwaves as a bigger inflationary risk than the war itself. Oxford Economics calculates the heat effect could add up to one percentage point to 2027 food inflation, damaging fruit, vegetable, and cereal harvests Source: infobae. Combined with lingering El Niño effects, the consultancy has sharply revised its 2027 forecast upward.

Disagreement among forecasts

While Oxford Economics sees 3% inflation, Rabobank warns of a more severe 5–9% spike if the Hormuz blockade persists into 2028 Source: infobae. The ECB projects a peak of 3.7% in Q2 2027 Source: infobae. Unprocessed foods are expected to rise first, before processed goods.