Prepare for a more expensive autumn: bread, cheese and vegetables will be among the first to hit

Consumers should prepare for a more expensive autumn: bread, cheese and vegetables will be among the first to feel the impact of rising food prices. This year’s extreme heat and drought across Europe, which significantly reduced crop yields, combined with high energy and fertilizer costs, are set to drive up global food prices. According to forecasts from Oxford Economics, food prices are expected to rise by 11.8 percent this year, with another increase of 4.8 percent anticipated in 2027. The most affected items will include wheat, fruits, vegetables, and dairy products. The European Federation of Grain Traders, Coceral, has revised its forecast for the total grain harvest in the 27 EU member states and the United Kingdom. Due to heatwaves that have impacted the entire continent, the projected output has been reduced from 310 million tons last year to 286.6 million tons. In Germany alone, due to drought and heat, the grain yield is expected to be slightly less than 42 million tons, approximately seven percent lower than the previous year. German farmers, represented by the DBV association, have recently estimated these figures. In addition to the damage caused by extreme heat, farmers are facing higher input costs driven by conflicts on the Middle East and the resulting blockade of the Strait of Hormuz, as well as ongoing issues in Ukraine. According to Oxford Economics analysis, the price of diesel fuel in July was 36 percent higher compared to the previous year, partly due to disruptions in the Strait of Hormuz. Fertilizer prices are also expected to rise by 22 percent this year. The war in Ukraine has had a significant impact on food prices. Wheat accounts for a quarter of the world's food price index, and Russia and Ukraine together supply nearly 30 percent of the global export of wheat and over ten percent of corn exports. Higher economic analyst Tomáš Dvorák from Oxford Economics noted that attacks on Russian and Ukrainian ports, loading facilities, and vessels, along with difficulties in transporting grain through the Black and Azov Seas, could affect the annual grain export capacity of 86 million tons, 52 million tons from Russia and 34 million tons from Ukraine. This represents almost 17 percent of global grain exports. The Food and Agriculture Organization (FAO) has also warned of a new wave of food price increases. At the beginning of the month, the organization released data showing that global food prices rose in July. The FAO’s basket of basic food items, which tracks average prices, increased by one percentage point compared to the previous month. Prices for grains rose by 6.9 percent, while prices for plant oils surged by 17.3 percent. Although the Oxford Economics index tracks raw material prices, the predicted 11.8 percent increase for this year remains below the 14.2 percent increase recorded in 2022. Which foods will see the biggest price hikes? Dvorák estimates that the most affected will be staple crops such as wheat, fruits, and vegetables, as well as dairy products, due to the impact of drought and heat on their production and processing. Consequently, items like bread, cheese, wine, and oil are likely to become more expensive, although meat prices may not rise as sharply. According to Luka Juvančić, a professor at the Faculty of Biotechnology in Ljubljana, the cost of meat for herbivores, including beef, might temporarily decrease due to fewer livestock holdings, leading to a surplus of meat on the market. Wheat, which is a highly fertilized crop, is under the most pressure. Researchers reported that wheat prices are expected to rise by 36 percent in the third quarter of this year, reaching $6.92 per 30 liters. Dvorák believes that the impact of price changes on fresh produce, especially fruits and vegetables, will be quick and consumers are likely to notice the change within two to three months, meaning between October and November. For processed food, the most significant effect on supermarket prices is expected around six to nine months later, roughly between February and May 2027. Economist Jed Cartledge from Oxford Economics warns that prices could rise even more than predicted, as the consequences of events in the Black Sea remain present, and the weather conditions continue to pose challenges.