Food price warning for Irish households as weather shocks threaten 2027 costs

Irish households could face continued pressure on grocery bills into 2027 as extreme weather, higher energy costs and disruption to global food production increase uncertainty around food prices.

The warning comes as inflation in Ireland is forecast to remain above 3% next year, while economists have highlighted the impact heatwaves, droughts and flooding can have on agricultural production and international food supplies.

The latest figures from the Central Statistics Office (CSO) show consumer prices in Ireland were 3.7% higher in August than during the same month last year.

This was up from an annual inflation rate of 3.4% in July, with August marking the second consecutive month in which all 13 divisions measured by the Consumer Price Index recorded annual increases.

Further pressure could remain into next year, according to forecasts published by the Economic and Social Research Institute (ESRI) on Tuesday, September 29.

The ESRI had forecast inflation of 3.2% this year and 2.7% in 2027 in March, but its latest outlook predicts inflation will remain above 3% next year.

Ireland's exposure to movements in international energy markets is among the risks highlighted by the institute.

The ESRI said the escalation of conflict in the Middle East and damage to energy production infrastructure had contributed to sharp increases in oil and gas price futures.

It warned that Ireland's reliance on fossil fuels leaves the country particularly exposed to international price pressures being passed on to households and businesses.

At the same time, extreme weather is presenting another threat to food production.

Severe heat across parts of Europe this summer has affected agricultural production, while economists have warned that weather-related disruption could contribute to food inflation during 2027.

Analysis reported by Forbes in August said Oxford Economics expected weather to contribute more to food inflation in 2027 than the fading impact of geopolitical disruption.

Concern has also been raised about the potential impact of the 2026-27 El Niño weather cycle on global food production.

Economists have warned that a strong El Niño could increase the threat of droughts, floods and storms affecting harvests in major food-producing regions, potentially adding further pressure to international prices.

The European Commission has also identified weather as one of the uncertainties facing European agriculture.

Its summer 2026 short-term outlook for EU agricultural markets pointed to weather-related risks, animal diseases and trade tensions, alongside the impact of conflict in the Middle East.

While production of several agricultural commodities was expected to rise, cereal production was forecast to fall, although it was expected to remain close to the five-year average.

Poor harvests can reduce the availability of agricultural commodities, while increased energy and other input costs can put further pressure on farmers and food producers.

Irish households are already experiencing significant increases in other essential expenses.

CSO figures show housing, water, electricity, gas and other fuels were 8.5% more expensive in August than a year previously, while transport prices increased by 5.4%.

The rise in housing and energy costs was linked to higher prices for home heating oil and electricity, as well as increased rents and mortgage interest repayments.

Despite the inflation concerns, the ESRI remains relatively positive about the wider Irish economy.

It expects modified domestic demand to increase by 2.6% in 2026 and 3.4% in 2027, with unemployment remaining low and household spending continuing to increase.