Fresh produce drives Europe's food price rebound, Italy up 7.5% in October

Unprocessed food prices rose 4.6% across the euro area. That rise lands harder than the 1.6% headline for food, alcohol and tobacco.

Fresh food leads the rebound

One unknown is how much of the energy and fertiliser cost has yet to reach shelves. The ECB says the pass-through takes several months. French fresh produce prices rose 8% year on year in October, down from 9.5% the month before. Across the euro area, unprocessed food prices rose 4.6% in October, after 2.7% in August.

The headline is calmer. Processed food, alcohol and tobacco managed just 0.5% in October.

Why fresh produce moves first

Energy, by contrast, rose 20.8% year on year in October. Germany's overall food prices rose 0.4% in October and Portuguese unprocessed food 3.7%. Energy costs reach supermarket shelves with a lag of several months. They arrive through transport, fertiliser, packaging and processing. Fertiliser prices surged after the blockade of the Strait of Hormuz. Fertilisers can account for as much as 16% of agricultural inputs. The EU imports about 30% of its nitrogen fertilisers and 70% of its phosphate fertilisers. Fresh produce reacts faster than products exposed mainly to energy costs. Supply shortages hit those markets directly. The ECB estimates this year's drought and heat could add 0.3 to 0.8 percentage points to euro area food inflation over the next year. Its economists noted that unprocessed food inflation had already jumped to 4% in September.

A continent split in two

Food prices in Bulgaria, Romania and Estonia have risen by just over 50% since September 2021. Hungary is above 50% too.

Across the EU as a whole the increase is roughly one-third. It is around 25% in France, Sweden and Luxembourg. The ECB puts euro area food prices about 30% above their end-2021 level. The range runs from 24% in Finland to 48% in Estonia. Bulgaria also recorded the EU's largest producer price increases in September: 4.6% month on month and 22.9% year on year. In September, Cyprus had the highest food and non-alcoholic beverage inflation at 4%. Spain followed at 2.7%, then Romania at 2.6%, Malta at 2.5% and Portugal at 2.4%.

Supermarkets are repricing, but less than in 2022

The pattern differs from 2022, when the repricing wave kept building.

ECB monitoring published on 2 November found the frequency of supermarket price increases rose in March but then stabilised. The average size of an increase changed little. The monitoring draws on the Daily Price Dataset. The BIS says it holds billions of daily observations covering 34 million unique products. ECB staff projections from September put food inflation at 3.4% in the third quarter of 2027, with a 2.8% average for the year. The ECB cut its average food inflation forecasts for 2026 and 2027 by 0.7 percentage points from June.

What happens next

Pantheon Macroeconomics expects euro area inflation to peak at 4.5% in January 2027. It says the ECB could raise interest rates in December.