Why this summer's heatwaves could raise your supermarket bill next year
While food inflation has eased across the eurozone, economists say this summer's extreme heat is now a bigger threat to next year's supermarket prices than the recent Iran war, as damaged harvests could outweigh the fading impact of higher oil and fertiliser costs.
Food inflation has finally begun to ease across the eurozone, offering some relief to households after years of rising grocery bills.
But economists warn the respite may not last.
Instead of the recent Iran war, this summer's extreme heat is now emerging as the biggest risk to food prices next year, with droughts and heatwaves threatening harvests across Europe and beyond.
"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 new report.
The warning comes despite fears earlier this year that higher oil and fertiliser prices triggered by the conflict between Israel and Iran would quickly feed through to supermarket shelves.
Those concerns have eased as oil and fertiliser prices have fallen back following the ceasefire. Economists say global commodity shocks typically take around a year to reach consumers, meaning the earlier spike could still add modest upward pressure to food prices in 2027.
Economists at Oxford Economics and Deutsche Bank expect food price inflation to pick up again next year as higher commodity prices feed through the food supply chain.
Higher energy and fertiliser costs feed into food prices through two main channels. First, energy is used across the food supply chain — from tractors and transport to processing, packaging and refrigeration — making production more expensive. Second, fertiliser prices rise with natural gas costs, increasing farmers' expenses. These costs take time to reach supermarket shelves: energy prices can affect fertiliser within weeks, but lower fertiliser use or changes in crop planting typically push up food prices only after the next harvest.
Oxford Economics estimates the combined impact of higher oil, fertiliser and agricultural commodity prices could add around 0.5 percentage points to eurozone food inflation over the coming year. The effect is expected to build gradually, affecting fresh food before processed products.
However, the bigger uncertainty now is the weather. High temperatures and drought can reduce crop yields, pushing up prices for fruit, vegetables, grains and other agricultural products. Oxford Economics estimates the weather effect alone could add up to one percentage point to food inflation next year, helping lift eurozone food inflation to around 3% in 2027.
It estimates that the weather effect alone could add up to one percentage point to food inflation next year.
Economists at Deutsche Bank found that, despite oil and fertiliser prices falling back from their peaks, the March-June commodity shock could still lift food prices by around 1.3% in the UK and 0.8% in the euro area over the next year. That would add roughly 0.1 to 0.15 percentage points to overall inflation.
Why food inflation is still slowing
Eurozone food inflation has declined from 2.5% year on year in December 2025 to 1.6% in June 2026, according to Eurostat's flash estimate. This marks the lowest reading for harmonised food inflation since mid-2021.
Leading indicators suggest food price inflation could remain subdued for the rest of the year. The slowdown has been supported by a strong grain harvest in 2025 and an oversupply of raw milk, which has reduced dairy prices.
Earlier global shocks have also eased, with chocolate, cocoa and coffee prices stabilising after surging in 2025. Meanwhile, olive oil prices continue to fall from their record highs in 2022, while lower energy costs have reduced food processing costs.
Oxford Economics expects these factors to keep food inflation subdued in the coming months and has lowered its forecast for food, alcohol and tobacco inflation to 2.1% in 2026. "But we think food price inflation is still poised to accelerate, just with a longer lag than we previously assumed," the report says.
Deutsche Bank economists also point to easing price pressures. Futures markets suggest energy prices should decline gradually over the coming months, while global food and fertiliser prices have largely stabilised. Farmgate and wholesale prices also continue to signal subdued food inflation.
Nevertheless, they caution that renewed geopolitical tensions could reverse that trend.
Why this summer's heatwaves could raise food prices next year
This summer's heatwaves and unusually warm, dry conditions could have a greater impact on food prices than the commodity shock itself. Damage to crops is already considered unavoidable, while further heatwaves could reduce harvests further, pushing food inflation higher in 2027.
A strong El Niño event could also be intensifying extreme weather, increasing the risk of further disruption.
"The adverse weather impact could build further due to the particularly strong El Niño this year. We estimate it will add up to 1 percentage point to food inflation next year, and we will raise our 2027 forecast to around 3%," Oxford Economics said.
The expected jump in prices is forecast to appear in the first half of 2027 before easing gradually in the second half of the year.
Long-term cost of heatwaves
Oxford Economics refers to a 2023 ECB working paper that found rising temperatures keep pushing food prices and overall inflation higher over time, with the strongest effect on food. It also found that higher temperatures can continue to affect inflation for up to 12 months after the initial weather shock.
The ECB working paper estimates that, by 2035, global warming could raise global average annual food inflation by 0.92 to 3.23 percentage points, depending on the climate scenario. It also found that Europe's 2022 heatwave raised European food inflation by 0.67 percentage points and eurozone food inflation by 0.78 percentage points, with the largest effects in southern Europe.
But future heatwaves could have an even bigger impact on food prices. Under continued warming, the inflationary impact of extreme summers is expected to increase. The ECB estimates that if a heatwave similar to the one in 2022 occurred under 2035 climate conditions, it would raise European food inflation by around one percentage point, compared with 0.67 percentage points today. The researchers argue that as the climate warms, crops become more vulnerable to heat stress, meaning the same heatwave is likely to cause greater harvest losses and stronger food price pressures.
