Inflation in the euro area has fallen markedly—from a peak of 10.6% in October 2022 to around 2%—yet food prices continue to bite. Consumers are now paying roughly one-third more for their groceries than before the pandemic. This persistent gap between food and overall inflation, now at 3.2% as of August 2025, poses an ongoing challenge for the European Central Bank (ECB).

Food prices matter greatly for households because everyone needs to eat, and essential goods take up a larger share of income for lower-income families. For these households, putting a meal on the table has become noticeably more expensive, with food prices up between 20% and 57% across euro area countries since 2019. Key contributors to this surge include the energy and fertiliser price shocks triggered by Russia’s war against Ukraine, rising labour costs, global commodity price increases, and the growing influence of climate change on agricultural production.

Beyond short-term cost pressures, structural factors—such as lagging productivity growth in agriculture and extreme weather events—are likely to intensify. Droughts in southern Spain, for instance, have sharply raised olive oil prices, while adverse weather in major producing countries has driven up coffee and cocoa costs.

For the ECB, tracking these dynamics is essential. Food price changes influence how people perceive inflation and shape their expectations, given that they are both frequent and salient. Moreover, because food costs weigh more heavily on poorer households, high food inflation can fuel wage pressures through second-round effects. Understanding these links between food prices, inflation expectations, and income distribution is crucial for maintaining price stability in the euro area.