Food remains relatively cheap in developed nations, accounting for just 10% of UK household spend, but farmers worldwide face mounting pressures that could end the era of inexpensive food. Extreme weather across the northern hemisphere — wildfires in Europe and the worst harvest in decades for British growers, per the National Farmers’ Union — signals climate-driven disruption. A strong El Niño threatens agriculture in South America, Africa, and Asia, while ECB-backed research estimates climate shocks could add 0.9–3.2 percentage points to global food inflation annually by 2035, lifting headline inflation by 0.3–1.2 points.

US farmers predict their worst downturn in 40 years as war spikes fuel and fertilizer costs, and rising labor expenses compound weak profitability. UBS analysts warn food inflation will stay structurally above the historic 2.5% average, affecting over 100 listed firms — benefiting equipment makers like Sweden’s Alfa Laval but hurting retailers and hotels such as Next and Accor. Higher food prices could spur wage demands, forcing central banks to raise rates, linking a poor Brazilian harvest to French mortgage costs.

The shift mirrors the economic reach of AI or GLP-1 drugs, making food inflation a portfolio-wide concern.