Food Price Inflation to Hit Hard Next Summer, ECB Economist Warns

Food price inflation will be a major driver of overall inflation in the coming year, according to Philip Lane, chief economist at the European Central Bank. He warned that the rise in food costs will be most visible next summer, and is dependent on developments in energy costs, including oil and gas.

Lane stated that the current situation is 'really uncertain', and weather events like El Nino will also contribute to food inflation over the coming year. The transmission of higher input costs into final food prices generally takes between three and six months, meaning that the current input costs have already locked in future inflation.

The availability of certain crops is becoming increasingly concerning for 2027, with farmers switching to crops such as soy due to higher fertiliser costs in major grain-growing regions. Data from the US shows a record low total wheat area planted this year.