Food price inflation to hit European wallets by Christmas

RaboResearch predicts a prolonged period of higher energy prices and expects food price inflation in Europe to rise again as a result. This may not happen immediately, but it is increasingly likely that groceries will become more expensive in Europe toward the end of the year.

Because the food industry is very energy‑intensive, sustained increases in energy prices will inevitably raise operating costs across the entire value chain – from production and packaging to transportation and agriculture. This will set the stage for tense end‑of‑year price negotiations between food manufacturers, retailers, and foodservice operators.

The higher energy prices are already eroding consumer purchasing power and confidence across Europe. As food prices rise further, consumers are likely to respond in the same way they have in recent years: by trading down. However, after three years of managing their budgets, the scope for additional savings has become limited. Any further (food) inflation could well trigger declines in retail sales volumes and foodservice traffic.