European grocery basket hits €95 as food inflation stays sticky

For retailers, the persistent high basket cost creates a tricky environment. Discount chains like Aldi and Lidl have gained market share across the EU6 as shoppers trade down. Premium grocers are responding with more private-label offerings and smaller pack sizes to hold onto customers who are watching every euro. Circana's report notes that private-label penetration has hit record levels in several markets. Own-brand products now account for more than 35% of total grocery sales in Germany and Spain.

Manufacturers face a different pressure. Input costs for commodities like wheat, vegetable oils and dairy have eased from their 2022 peaks. Labor and energy costs remain elevated. The gap between falling input prices and sticky retail prices has widened margins for some packaged-food companies. That gap is narrowing as retailers push back on further price increases and consumers switch to cheaper alternatives.

The political dimension is hard to ignore. Food inflation was a major driver of the cost-of-living crisis that fueled protests and electoral shifts across Europe in 2023 and 2024. Governments in France, Spain and Italy have imposed temporary price caps or tax cuts on staple goods. Those measures are expiring in several countries, which could push basket costs higher again later this year.

Circana's next update is due in October, covering the back-to-school and holiday shopping periods. Those months will test whether the plateau holds or cracks under renewed price pressure from energy costs heading into winter.