A re-opening of the Strait of Hormuz will "not mean an immediate return to normal" and higher food prices are "unavoidable" analysts have warned.

According to Rabobank analysts the prolonged disruption in the Strait of Hormuz has set the stage for "renewed food price inflation" across Europe, which is likely to peak in 2027.

Evidence suggests that higher energy and packaging costs are already feeding through the food chain.

According to analysts the "higher for longer" energy environment is impacting on European economies and the knock-on effect could see slower, weaker consumption, higher overall inflation and unemployment.

On top of this they have cautioned that higher oil and gas prices "do not bode well for the food industry".

The Rabobank report highlights that any increases "ultimately end up in the costs of materials" - either directly or in indirectly via the supply chain in the form of higher costs for fertilisers, packaging, diesel, miling, grinding or agricultural raw materials.

Food prices

Analysts have acknowledged that while hedging strategies may temporarily mitigate or delay the direct impact of higher energy prices for most food producers energy-related costs are "already weighing on food manufacturers' margins".

Ultimately they warn that because food manufacturers have "limited capacity" to absorb further food inflation consumers are likely to face another round of food price hikes starting by the end of the year and continuing into 2027.

The key concern that this poses for Irish producers and farmers is that consumers may be unable to cope with further increases in their grocery bills and cut back on buying certain items.

According to latest data grocery price inflation fell back in Ireland during May to 5.5% but was still ahead of the general rate of inflation.

Research from the Central Statistics Office (CSO) has also highlighted that while consumers have seen price increases in some family favourites over the last 12 months there has also been a fall in the price of other foods.

Anthony Dawson from the CSO said: “There were price increases in the 12 months to May 2026 for sirloin steak per kg (+€1.01) and Irish cheddar per kg (+8c)".

But he also pointed out that there was a fall in the price of some shopping basket staples over the same period of time - a pound of butter fell by 44c, while a 2.5kg bag of potatoes was down 10 cent and 2 litres of full fat milk fell by 8 cent.