Summer heatwaves are set to become a key factor in next year’s grocery bills, economists say, as soaring temperatures threaten crops across Europe and beyond.
Heat and drought pose a bigger risk than recent wars
Food inflation in the eurozone has slipped from 2.5% in December 2025 to 1.6% in June 2026, according to the latest flash estimate. The decline follows a strong grain harvest and an oversupply of raw milk that pushed dairy prices down. Yet analysts warn that the current easing may be short‑lived.
“We think this summer’s heatwaves will be a stronger upward driver of food prices next year than the war,” said Tomas Dvorak, senior economist at Oxford Economics, in a recent report. The comment comes after earlier concerns that higher oil and fertiliser costs linked to the Israel‑Iran conflict would quickly filter through to supermarket shelves. Those worries have faded as oil and fertiliser prices fell after the ceasefire.
Even so, the lag between commodity shocks and consumer prices means the earlier spike could still add modest pressure to food costs in 2027. The institute and Deutsche Bank both project a renewed rise in food price inflation next year, driven by lingering effects of higher energy and fertiliser prices.
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How higher energy costs affect the supply chain
Energy fuels every stage of food production, from tractors and transport to processing, packaging and refrigeration. When fuel prices rise, these costs flow through the supply chain, making goods more expensive. Fertiliser prices, which are tied to natural gas costs, also climb, raising farmers’ expenses.
These price pressures do not appear on supermarket shelves immediately. Energy price changes can influence fertiliser costs within weeks, but reduced fertiliser use or altered planting decisions typically affect food prices only after the next harvest. The institute estimates that the combined impact of higher oil, fertiliser and agricultural commodity prices could add roughly 0.5 percentage points to eurozone food inflation over the coming year, with the effect building gradually and first affecting fresh produce.
Deutsche Bank economists note that, despite oil and fertiliser prices retreating from their peaks, the March‑June commodity shock could still lift food prices by about 1.3% in the United Kingdom and 0.8% in the euro area over the next twelve months, adding roughly 0.1 to 0.15 percentage points to overall inflation.
Beyond commodities, the weather now dominates the outlook. High temperatures and drought can cut yields of fruit, vegetables, grains and other staples, pushing prices higher. The institute calculates that the weather effect alone could contribute up to one percentage point to food inflation next year, potentially bringing eurozone food inflation to around 3% in 2027.
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The researchers say the adverse weather impact could add another 1% to food inflation, prompting a revised forecast for 2027.
When the heatwave hits, the first half of 2027 is likely to see the steepest price increases, with a gradual easing later in the year as markets adjust.
Households that rely on fresh produce may feel the pinch sooner, as fresh items typically respond faster to supply shortfalls than processed foods. A modest rise in grocery bills could be felt across the board, especially in regions that depend heavily on locally grown fruits and vegetables.
While commodity markets have stabilized and futures suggest energy prices will decline gradually, analysts caution that renewed geopolitical tensions could reverse the current trend. For now, the combination of lingering commodity effects and an aggressive summer heatwave forms the core of the inflation outlook for next year’s grocery aisles.