ECB: Has food inflation lost its bite?

The summary above is from the announcement ECB published on October 20, 2026.

What the announcement says

Since the start of 2026, headline inflation increased from 1.7% in January to 3.8% in September (Chart 1, panel a). This increase was driven mainly by energy commodity prices rising sharply after the start of the conflict in the Middle East, which pushed consumer energy inflation to 18.9% in September.

At the same time, food inflation fell from 2.6% in January to 1.1% in August, its lowest level since mid-2021, before edging up to 1.3% in September, a move we come back to further below. How does this square with everyday experience at the supermarkets and what is driving these trends?

First of all, the inflation numbers show that the rate at which food prices are rising has slowed considerably, although the level of food prices has still gone up overall.

As for drivers, if we start by looking at the main food items, we see that food inflation has decreased across the board, but some items stand out (Chart 1, panel b). For example, coffee, chocolate, fruit and dairy products, which had recorded strong price increases in 2025, were contributing negligibly to total food inflation by September 2026.[2]

(annual percentage change, percentage point contributions)

(percentage point deviations and contributions)

Notes: In panel a) inflation averages are calculated over the period 1999-2026. In panel c) the decomposition of the drivers explaining deviations in euro area food inflation from its long-term average (calculated over the period from December 1996 to September 2026) follows Kuik, F., Lis, E., Paredes, J. and Rubene, I. (2024), “What were the drivers of euro area food price inflation over the last two years?”, Economic Bulletin, Issue 2, ECB. The latest observations are for September 2026.

Next, if we look more deeply into food supply chains, we see that low food inflation mainly reflects earlier favourable factors that are still feeding through into consumer prices (Chart 1, panel c). Last year, farm yields in Europe were generally good, with above-average harvests for crops such as cereals and oilseeds. In addition, prices on international markets for staples like coffee, tea, cocoa and sugar have fallen from their previously high levels. Good harvests and lower international prices have also lowered euro area farm-gate prices. Put together, these factors have kept food inflation low.

Several upstream indicators suggest that pipeline pressures on food inflation are building again: a double shock from energy and extreme weather could reignite food price pressures.

Looking first at the energy shock: it takes time for energy prices to affect food prices. Although energy affects food production directly, higher energy costs also have a significant indirect impact on food production. Energy costs gradually spread through supply chains, affecting transportation, fertilisers, packaging and processing costs. These indirect effects can take several months to show up in consumer prices.

The recent energy shock is having a significant effect on energy producer prices at the initial stages of food production (Chart 2, panel a). It is also showing up in the producer prices of fertilisers, which have surged since the blockade was imposed on the Strait of Hormuz. Unlike the situation in 2022, the recent increase in fertiliser prices directly reflects disruption to supply, as well as higher energy costs.

At later stages of production, however, producer prices for food had not yet increased as of August because there tends to be a lag before they reflect changes in input costs.

ECB

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Read the full announcement on ECB

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