Filenews 29 September 2025 - by Theano Thiopoulou
Inflation has declined significantly in the euro area from a peak of 10.6% in October 2022 to 2.0% recently. At the same time, wages have risen, offsetting a large part of the previous losses in real income. In general, we are in a better position. But for many households, this is not the case, ECB staff said in a blog note published last week.
Authors Elena Bobeika, Gerrit Kester and Christian Nickel report in the analysis that the increase in food prices from the end of 2019 to August 2025 ranges from 20% in Cyprus to 57% in Estonia. According to the chart presented, the increase in prices in Greece is 30%, in Italy 28%, in Malta 32%, in France 27%, Spain 34%, Portugal 32%, Ireland 26%, Latvia 52%, Lithuania 55%, Germany 37%, Netherlands 39%, Belgium 38%, Luxembourg 29%, Slovakia 52%, Austria 39%.
"Russia's unjustified war against Ukraine has caused a sharp increase in the cost of energy (especially gas) and fertilizers. This led to an increase in food prices across the euro area in 2021-23, in particular in the Baltic States. More recently, increases in labour costs and global food prices, linked in part to climate change, have played an important role in the renewed increase in food inflation," the article says.
The ECB's technocrats describe an image that many citizens will have felt. "When people go to a supermarket, many of them feel poorer than they did before the surge in inflation that followed the pandemic. One in three of them is worried about whether they will be able to buy the food they would like. And this is more than just a feeling: food prices remain stubbornly high – a third higher than before the pandemic."
Characteristically, they state "everyone should eat. However, food prices are even more important for lower-income households, which consume the largest share of their income on food.
What the ECB is interested in
Typically, central banks such as the ECB focus on overall price movements, they note. "Most of the time, less attention is paid to the individual components, energy, services, consumer goods and food. There are three reasons why food prices are of particular interest today. Firstly, the gap that has been created between food prices and overall prices is much larger and more persistent than in the past. Secondly, food prices affect everyone all the time and therefore shape inflation expectations. Third, increases in food prices hit poorer households more than others." Since the introduction of the euro in 1999, they indicate, food prices have tended to rise slightly more than other prices, and the gap that has accumulated since 2022 is clearly persistent.
A look at the shelves
"Developments in food prices have been quite heterogeneous between product categories and between countries. Meat prices for beef, poultry and pork, for example, are now more than 30% higher than at the end of 2019. Meanwhile, milk prices have risen by about 40% and butter by about 50% compared to pre-pandemic levels. The prices of coffee, olive oil, cocoa and chocolate have risen even more," they say. Climate change is emerging as another key factor: extreme weather events, such as droughts and floods, are becoming more frequent and can severely disrupt food supply chains. For example, prolonged droughts in southern Spain in 2022 and 2023 led to sharp increases in olive oil prices, while coffee and cocoa prices rose rapidly following adverse weather conditions in key exporting countries such as Ghana and Côte d'Ivoire."
