Food inflation in the eurozone is decelerating, but economists warn the relief is likely short-lived.
A combination of surging energy and fertiliser costs linked to the conflict in Iran, alongside the impact of this summer’s extreme weather, is expected to drive a sharp rebound in supermarket prices within the next 12 to 18 months.
Economists at Oxford Economics and Deutsche Bank highlight a growing divergence between current consumer price data and forward-looking cost pressures.
While headline food inflation has cooled, the underlying cost structure for producers is deteriorating.
The delay in price transmission means that the full impact of recent commodity shocks has not yet reached the checkout counter.
The conflict in Iran has disrupted energy markets and pushed up fertiliser prices, creating a cost base that is significantly higher than when current inflation figures were calculated.