Food Inflation in Europe Squeezes Budgets, Shifts Consumer Habits

Summary

Food infla­tion in Europe is dri­ving changes in diets and retail mar­kets, with prices for items like meat, milk, and olive oil sig­nif­i­cantly higher than pre-pan­demic lev­els. Consumers are turn­ing to more afford­able options such as pri­vate-label prod­ucts and dis­counted olive oil, with regional dif­fer­ences in price increases and con­cerns about qual­ity and sus­tain­abil­ity in the mar­ket. Despite fluc­tu­a­tions in pur­chas­ing power, European house­holds are adapt­ing to ris­ing prices by adjust­ing con­sump­tion habits and turn­ing to alter­na­tive prod­ucts.

Food infla­tion across Europe is erod­ing house­hold pur­chas­ing power, reshap­ing diets and dri­ving struc­tural changes in retail mar­kets.

In recent years, food prices have grown sig­nif­i­cantly faster than over­all infla­tion, squeez­ing fam­i­lies’ bud­gets and fuel­ing demand for more afford­able alter­na­tives, includ­ing pri­vate-label prod­ucts and dis­counted olive oil.

According to ana­lysts at the European Central Bank (ECB), con­sumers are cur­rently pay­ing about a third more for their meals com­pared to pre-pan­demic times.

“Meat prices (…) are now more than 30 per­cent higher than at the end of 2019. Meanwhile, milk prices have risen by around 40 per­cent and but­ter by around 50 per­cent com­pared to pre-pan­demic lev­els,” ECB experts Elena Bobeica, Gerrit Koester and Christiane Nickel wrote in a post on the ECB blog.

“Prices for cof­fee, olive oil, cocoa and choco­late have increased even more,” they wrote.

The ana­lysts noted that the gap between over­all infla­tion, which has fallen back toward 2 per­cent, and food-spe­cific infla­tion, which remains sig­nif­i­cantly higher, has never been wider in the his­tory of the European Union.

The diver­gence is also per­sis­tent, span­ning sev­eral years, and its con­se­quences are being felt most acutely by vul­ner­a­ble house­holds.

“For those fam­i­lies, putting a meal on the table every day con­sumes a larger share of their income,” the ECB blog explained.

Between 2019 and 2025, olive oil prices increased by approx­i­mately 50 per­cent across the EU, with even sharper spikes in indi­vid­ual mar­kets.

In the United Kingdom, offi­cial sta­tis­tics showed that olive oil retail prices dou­bled between 2019 and 2024, ris­ing by 113 per­cent.

Regional dif­fer­ences remain stark.

Food price infla­tion exceeded 50 per­cent in the Baltic states, while north­ern Europe reported increases of more than 30 per­cent.

Southern Europe also faced steep surges: Spain (+34 per­cent), Portugal (+32 per­cent), Croatia (+47 per­cent), and Slovenia (+39 per­cent). Slightly lower rates were observed in Greece (+30%) and Italy (+28%).

Only France, Ireland and Finland con­tained food infla­tion below 28 per­cent.

The ECB attrib­uted these price hikes to a mix of shocks and struc­tural pres­sures.

The COVID-19 pan­demic and the Russian war against Ukraine dis­rupted sup­ply chains and raised input costs.

At the same time, deeper fac­tors are reshap­ing food mar­kets: ris­ing incomes in emerg­ing economies have boosted global demand for agri­cul­tural com­modi­ties, EU agri­cul­ture lags other sec­tors in pro­duc­tiv­ity growth and cli­mate change is tight­en­ing sup­plies.

“Climate change is emerg­ing as another key dri­ver,” the ECB wrote, high­light­ing how extreme weather events increas­ingly dis­rupt sup­ply.

In olive oil, pro­longed droughts in south­ern Spain dur­ing 2022 and 2023 were a deci­sive fac­tor behind surg­ing prices.

Consumers feel these pres­sures. The ​“State of Grocery Retail Europe 2025” report by McKinsey (https://www.mckinsey.com.br/industries/retail/our-insights/state-of-grocery-europe-report) found that shop­pers are trad­ing down.

Supermarkets are gain­ing ground over tra­di­tional small shops, par­tic­u­larly in Central, Eastern, and Southern Europe, while pri­vate labels are expand­ing rapidly.

About 84 per­cent of con­sumers say they will con­tinue to buy store brands even if their pur­chas­ing power returns to nor­mal.

Olive oil is no excep­tion. Over the past decade, pri­vate label expan­sion has firmly extended into this cat­e­gory.

Retailers’ dom­i­nance in set­ting prices and per­cep­tions has been rein­forced through pro­mo­tions and dis­count cam­paigns, shap­ing how house­holds con­sume olive oil.

A 2024 (https://www.cbi.eu/market-information/processed-fruit-vegetables-edible-nuts/olive-oil/market-potential) study by the Dutch government’s Centre for the Promotion of Imports from devel­op­ing coun­tries (CBI) under­scored how strong this trend has become.

It con­cluded that non-EU pro­duc­ers face min­i­mal chances to sell olive oil under their own brand in main­stream European retail mar­kets, as pri­vate labels dom­i­nate shelf space.

CBI also noted that label­ing rules, such as ​“bot­tled in…” or ​“prod­uct of…”, allow some flex­i­bil­ity in ori­gin dec­la­ra­tions, rein­forc­ing retail­ers’ con­trol.

For con­sumers squeezed by ris­ing prices, pri­vate labels and dis­counted olive oils are a nat­ural choice.

But this shift raises con­cerns among qual­ity pro­duc­ers.

“When con­sumers in Italy are sur­veyed about olive oil, their first con­cern is sus­tain­abil­ity and prod­uct qual­ity. But then, when you look at what they place in their bas­kets, they buy the cheap­est option,” Anna Cane, pres­i­dent of the Italian olive oil group at Assitol, told Olive Oil Times.

Still, oppor­tu­ni­ties exist. While price remains a deci­sive fac­tor, aware­ness of health and sus­tain­abil­ity is shap­ing long-term pref­er­ences.

A recent study pub­lished in the Journal of Agriculture and Food Research found that approx­i­mately three in four con­sumers across five Euro-Mediterranean coun­tries are will­ing to pay a pre­mium, up to 25 per­cent more, for extra-vir­gin olive oil pro­duced with reduced pes­ti­cide use.

The researchers found that envi­ron­men­tal aware­ness, health con­cerns and house­hold income strongly influ­ence will­ing­ness to pay for such prod­ucts.

As the EU pushes to cut pes­ti­cide use, these pre­mi­ums could sup­port sus­tain­able farm­ing prac­tices.

But the study also cau­tioned that income remains the deci­sive fac­tor: if house­holds feel finan­cially strained, qual­ity choices are the first to be sac­ri­ficed.

Between 2019 and 2025, European house­holds expe­ri­enced sig­nif­i­cant fluc­tu­a­tions in their pur­chas­ing power.

During the 2022 infla­tion surge, real incomes declined as food and energy prices out­paced wage increases. Since then, ris­ing wages and social trans­fers have par­tially restored real incomes, with the ECB esti­mat­ing a 3.8 per­cent rebound between mid-2022 and mid-2024.

Still, the recov­ery is uneven across coun­tries, sav­ings rates remain ele­vated, and con­sump­tion growth is sub­dued.

In Mediterranean coun­tries, olive oil con­sump­tion remains cul­tur­ally resilient. Data from Spain’s Ministry of Agriculture, Fisheries and Food show that even low-income fam­i­lies rarely aban­don olive oil. Instead, they cut vol­umes, switch to blends or rely on pri­vate labels.

In Italy, ISTAT con­sump­tion data reveal sim­i­lar trends.

In north­ern Europe, by con­trast, the surge in olive oil prices risks shift­ing con­sumers to other fats, poten­tially alter­ing import dynam­ics.