EEMEA Food Retailers: Preview: deflation is a drag, but we anticipate a Q2 trough

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EEMEA Food Retailers: Preview: deflation is a drag, but we anticipate a Q2 trough

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EEMEA Food Retailers

Preview: deflation is a drag, but we

anticipate a Q2 trough

Price Objective Change

Lowering estimates on lower food inflation 13 July 2026

Food inflation averaged 0.7% in Poland in 2Q’26, a marked slowdown vs 2.3% in 1Q’26. Equity

Moreover, grocers continue to talk about operating in deflation, led mainly by fresh EEMEA

categories. Data reflects that soft commodity prices continued lower too. There is also a Food Retailers

negative calendar effect for Q2 from an earlier Easter shifting buying into Q1’26. Michael Jacks, CFA >>

Accordingly, LfL growth for grocers should be c3ppts lower q/q. For Dino, we now expect Research Analyst

LfL growth of just 1.1% in Q2, down from 4.4% in Q1 and for Jeronimo, we forecast Merrill+27 113Lynch055 (South158 Africa)

Biedronka LfL at -0.6% vs +2.3% in Q1. We also lower our food inflation assumption for michael.jacks@bofa.com

2H26-1H27 given lower brent crude. In combination, this translates to average EPS cuts Jameel Bakhsh, CFA >>

Research Analyst

in FY26-28E of -2.1% for Jeronimo Martins and -4.3% for Dino. Merrill Lynch (DIFC)

jameel.bakhsh@bofa.com

We still think Q2 is likely to be the toughest quarter Mohsen Ameeri >>

However, we think this is likely to be the trough given flow-through of higher energy Merrill Lynch KSA Company

prices which should impact in Q3. This oil-led inflation seems likely to be temporary, but mohsen.ameeri@bofa.com

base effects get easier from Q4 onwards as inflation started to slow in Sep’25 (Exhibit

4). Based on our latest price survey consisting of 40 basket items (Exhibit 5), average

basket prices in Poland increased by +2.6% m/m in June, albeit still -5% y/y in June.