RaboResearch predicts food price surge in Europe through 2027 amid Middle East conflict

Food price inflation in Europe is expected to build throughout 2026 and intensify next year, driven by surging energy costs from escalating geopolitical tensions in the Middle East. Energy markets have been shaken since the initial attack on Iran five weeks ago, according to a new RaboResearch report, which details the predicted impacts on the highly energy-dependent food supply chain — affecting food production, packaging, logistics, and agricultural inputs.

The food industry at large is particularly vulnerable to energy shocks, as systems like cooling, heating, milling, and the production of agricultural inputs depend heavily on electricity and fuel.

European grocery price hikes

While food price inflation in the EU may not happen immediately, it is forecast that groceries will become more expensive toward the end of 2026. Any inflation is also likely to trigger declines in retail sales volumes and foodservice traffic. 

RaboResearch says, “another wave of inflation may lead consumers to simply buy less or dine out less frequently,” and sets the stage for especially challenging price negotiations in the coming months between retailers and foodservice operators.

Ceasefire offers hope for critical trade routes

It has been widely reported in recent weeks how the conflict has severely disrupted shipping through the Strait of Hormuz, vital for food supplies because it carries a large share of the world’s oil, fuel, and fertilizer, which are essential for producing, processing, and transporting food globally.

RaboResearch’s report reveals that Brent crude prices have risen by 61% and TTF gas prices by 68% compared to pre-war levels. Fuel prices at the pump have also jumped sharply.

The report comes as President Trump announces a two-week ceasefire between the US and Iran, if shipping is allowed through the Strait of Hormuz, which is a crucial part of negotiations. 

Yesterday’s (April 8) truce deal between Iran and the US may pause a rapidly escalating regional war and open the door to negotiations to end it completely. But the deal does not apply to Israel’s war with Hezbollah in Lebanon, where fighting is ongoing. 

For now, Iran has agreed to stop blocking the Strait of Hormuz after Tehran had previously threatened to introduce a transit fee and vetting system in the Strait of Hormuz that would reshape how fertilizer reaches global markets. 

Disruptions in the Strait of Hormuz are restricting energy and fertilizer flows, driving up production and transport costs and putting global food supplies under pressure.

How will food manufacturers and consumers react?

One key point the RaboResearch report makes is that today’s energy shock will influence costs with a lag of several months. Since retailers and food manufacturers typically set prices annually, most European food companies can’t immediately pass on rising energy costs — but with energy making up 5–50% of production costs, higher prices are likely to be locked in during 2027 negotiations.

Already 33% higher than they were in early 2021, consumer food prices in Europe are projected to climb further, flags RaboResearch, which expects at least 5–10% food inflation in 2027. In a more severe energy scenario, food price inflation could go above 10%.

Cash-strapped consumers, who are now weighed down by heavy petrol prices, have already been “trading down” for several years, choosing lower-priced or less premium products (including cheaper proteins) instead of more expensive brands, to save money. For some consumers, there is little scope left to further reduce expenditures, according to RaboResearch.

“A prolonged period of elevated energy prices is precisely what RaboResearch energy analysts expect. Their new baseline scenario assumes the war will continue until mid-April, followed by a gradual reopening of the Strait of Hormuz. In this scenario, transport flows will return step-by-step, but export volumes will only reach about 80% of previous levels by late August,” says the report.

In addition, structural damage to Qatar’s liquefied natural gas (LNG) production and export infrastructure will keep the international LNG market tight for an extended period. 

Global food prices and agriculture

The impact of elevated energy costs on food markets is already visible in recent global commodity data. The FAO Food Price Index’s latest data, released last week, shows that elevated energy prices are adding uncertainty to markets. World food commodity prices rose in March 2026 for the second month in a row, averaging 128.5 points in March, up 2.4% from February and 1.0% above their level a year ago.

“Price rises since the conflict began have been modest, driven mainly by higher oil prices and cushioned by ample global cereal supplies,” says FAO chief economist Máximo Torero. 

“But if the conflict stretches beyond 40 days with high input costs with current low margins, farmers will have to choose — farm the same with fewer inputs, plant less, or switch to less intensive fertilizer crops. Those choices will hit future yields and shape our food supply and commodity prices for the rest of this year and all of the next.” 

Oil prices forecast to decrease eventually

RaboResearch suggests that it will be around the end of this summer when average monthly oil prices will fall below US$100/bbl for oil, and €55/MWH for gas. For 2027, analysts project average prices of US$88 for Brent and €42 TTF.

If the Strait of Hormuz remains open and shipping is not further disrupted, oil prices will be pushed back sooner. But in the volatile context of war, much can happen, keeping energy and food markets on edge.