ECB Economic Bulletin Pre-Release: Slowdown of Food Price Inflation is Expected This Year

20 March 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – A slowdown in food price inflation is expected in the wake of the fading impact of external shocks on energy and food commodity prices, according to an Economic Bulletin paper pre-released by the European Central Bank on Wednesday.

‘This slowdown is expected to be gradual given the strong wage growth, particularly with rises in minimum wages’, the ECB said.

‘The surge in energy costs was a significant factor behind the rise in consumer food inflation in 2021 and 2022 with increases in global food commodity prices and in euro area farm gate prices also contributing significantly’, the ECB observed.

Domestic factors, such as wage and profit developments, had largely contributed to the rise of consumer food prices, as well as rising euro area farm gate prices, the ECB said.

The ECB noted that ‘the surge in food inflation had implications for household purchasing power, affecting those with lower incomes in particular’.