ECB analysis links persistent food inflation to commodity prices and expectations
An ECB analysis highlights the persistent food inflation in 2025, driven by specific commodity prices and structural factors. The study emphasizes how food price dynamics significantly influence consumers' overall inflation perceptions and short-term expectations.
Food prices shape consumer perceptions
Consumers pay close attention to food prices, which disproportionately influence their overall inflation perceptions and short-term expectations.
The ECB's Consumer Expectations Survey reveals that perceived and expected food inflation strongly impact one-year expectations.
Nearly two-thirds of respondents cite food prices as influencing their inflation outlook, a higher proportion than for any other basket item.
This underscores the importance of understanding food price dynamics for both overall inflation monitoring and consumer expectation assessment.
Commodities and climate drive price increases
Euro area HICP food inflation, at 2.4% in November 2025, remains above its pre-pandemic average, driven by coffee, tea, cocoa, sweets, and meat.
Commodity prices, notably for cocoa and coffee, doubled since January 2024 due to extreme weather, with increases passing through to consumer prices.
European meat prices also rose significantly due to declining supply.
Elevated wage growth in the retail sector contributed to cost pressures.
Food inflation is expected to ease further, supported by declining selling price expectations, with projections seeing it reach 2.1% by Q3 2026.