Why your grocery bill is still eye-watering — even though inflation is 'under control'?
Food inflation has fallen sharply from its 2023 peak — but European grocery prices are nearly a third higher than before the pandemic, and the reasons they stay high are structural.
Inflation is down, the European Central Bank is (largely) satisfied and the knock-on effects of the Iran war are mostly being kept under control for now. So why does a trip to the supermarket still feel like a small act of financial self-harm?
The short answer is that lower inflation does not automatically translate into lower grocery prices. Low inflation simply means that prices are rising more slowly than before, while the damage from the most brutal food price shock in a generation is baked in — and that effect is not going anywhere anytime soon.
1. The price level never came down. It just stopped sprinting
Here is the trick inflation statistics play on you. When analysts say food inflation has "fallen to 2.8%", they mean food is getting more expensive at a slower rate — not that it is getting cheaper. Prices do not reverse when inflation falls; they just stop climbing as fast. The mountain stays there even if the ascent slows.
Across the EU, food and non-alcoholic beverages recorded the single largest cumulative price increase of any consumer category over the past decade, rising by 33.2% between 2016 and 2025, according to Eurostat's harmonised inflation data — higher than energy, services or any other basket component.
Globally, OECD data shows food price levels were nearly 46% higher in mid-2025 than in December 2019. That magnitude of increase took just six years to accumulate, whereas before the pandemic, it took sixteen years to reach a similar percentage.
The psychology matters too. The European Central Bank's (ECB) Consumer Expectations Survey finds that food prices disproportionately shape how people feel about inflation overall — precisely because people shop for food frequently, it takes up a large share of their budget, and there is limited scope to substitute away from it.
One in three eurozone consumers, the ECB reported, now worries about being able to afford the food they want.
2. Wages went up — and you are paying for that, too
Once energy and supply chain costs stabilised, a new type of pressure took their place in the form of labour. Everyone along the food supply chain — farm workers, factory staff, logistics workers and checkout clerks — got pay rises.
Broadly, this is a good thing. The catch is that it costs money, and that cost ends up on your receipt.
ECB research on euro area food price drivers shows how significant this has been, with wages in agricultural sectors rising 6.2% year-on-year in 2022 and by above 5% again through 2023.
In transportation and storage, a critical link in getting food to shelves, wages rose 4.3% in 2022 and 6.3% during the first three quarters of 2023. Labour typically accounts for 10–15% of total costs in food manufacturing, according to ING Research.
Across Europe, labour costs rose 5.1% on average in 2025, still outpacing food price inflation, according to McKinsey's State of Grocery Europe 2026 report.
In Germany, wages rose 4.0% while food inflation sat at just 2.2%, meaning retailers were absorbing part of the difference, but only part.
The ECB's own wage tracker projects negotiated wage growth will stabilise at around 2.6% through 2026, meaning this structural pressure is not vanishing, even if it is softening somewhat at the edges.
3. Upstream costs are rising again — and shelves lag behind
Just when commodity markets started to ease, new shocks arrived. Eurostat's agricultural price data for Q1 2025 shows milk up 12.6%, eggs up 10.7% and cereals up 9.6% year-on-year.
These are upstream inputs and they take months to reach a supermarket shelf. Meanwhile, of the 64 food items tracked by Eurostat, all but eight recorded price increases in 2025. Chocolate rose 17.8%, frozen fruit 13%, and beef and veal increased by 10%.
Eggs surged 20% or more in five EU countries, including 29% in Czechia and 27% in Slovakia.
Further back in the supply chain, trouble is building again. The World Bank's April 2026 Food Security Update flagged a near 46% month-on-month spike in urea, a key fertiliser, driven by energy market disruption from the Middle East conflict.
The ECB has explicitly highlighted "lagged effects from past price increases in international food commodities" as a reason food inflation will remain elevated into 2027, with staff projections placing it at "rates somewhat above 2%" through that year.
There is often a delay between higher costs for farmers and higher prices in the shops. Price shocks that hit farm gates in spring routinely reach consumers by autumn.
4. Supermarkets are not profiteering — but they will not absorb costs, either
The instinct to blame corporate greed is understandable and politically popular. It also does not always survive scrutiny.
A peer-reviewed study published in January 2025 analysed nearly 89,000 European food and beverage manufacturers across 2013–2022 and found that price markups — the margin above marginal cost — actually decreased over the period.
Meanwhile, McKinsey's 2026 European grocery report puts average EBIT margins in the sector at just 2.8%, a figure described as "a pause rather than a recovery" after years of compression. S&P Global analysis likewise noted that over half of rated European retailers would be unable to restore their pre-pandemic margins even by 2025.
These are not industries swimming in profit. They are industries with very little buffer. When costs rise — whether from wages, energy, packaging regulations or agricultural inputs — there is almost nowhere to absorb them except through higher prices. The question is never really whether costs get passed on, but how quickly.
5. The EU average hides something sadder in the east
A pan-European headline figure of around 2.8% food inflation in 2025 sounds manageable — at least if you live in Paris or Rome. It looks considerably grimmer if you live in Bucharest or Tallinn.
France recorded food inflation of just 0.7% in 2025, and Romania recorded 6.7%. But annual inflation rates only capture the rate of change. The Eurostat HICP food index — which tracks cumulative price levels since 2015 — tells the fuller story of where prices actually stand.
Hungary sits at 204.56, meaning food prices have more than doubled since 2015. Estonia is at 180, Lithuania at 177 and Poland at 174. France, by contrast, sits at 135.
What makes this particularly punishing is that food spending accounts for a far larger share of household budgets in Eastern Europe than in Western Europe.
In Romania, households spend roughly 25% of their income on food and non-alcoholic beverages, according to Eurostat national accounts data. In Bulgaria, the figure is around 21%, and in Latvia 20%.
Compare that with Germany at 11.5%, Luxembourg at 9.3% and the Netherlands at 11.7%.
A country where food costs 2.5 times what it did in 2015, and where a quarter of household income goes on groceries, is not experiencing the same reality as France, even if both are technically within the eurozone, where the ECB aims to keep inflation around its 2% target.
