According to the EY report; Geopolitical uncertainties and energy prices will continue to affect consumption in 2026

The Consumer Products and Retail Industry Outlook report published by EY, an international consultancy, assurance, corporate finance, strategy and tax services company; Updated macroeconomic assumptions along with increasing tension in the Middle East reveal that there will be pressure on consumption in Europe throughout 2026. According to the report, the temporary energy shock increased Eurozone inflation by 0.5 points; It reduces growth expectations from 1.3% to 1.0%. Experts state that the rise in energy prices and geopolitical uncertainties affect household purchasing power, increasing the tendency to save and bringing a period of "cautious spending" in consumer behavior. 

The report predicts that Eurozone inflation will remain at an average level of 2.4% in 2026 and will fall below 2% in 2027. However, permanent supply problems in natural gas production indicate that energy prices in Europe will remain structurally higher in the medium term. 

According to the report covering European countries including Turkey, inflation rates; Differences in wage increases continue to diverge significantly due to regulated prices and SCT regulations. While inflation data as of February 2026 shows a wide distribution among countries, inflation remains high due to the impact of energy prices and VAT increases, especially in some Central and Eastern European economies such as Romania. On the other hand, price increases remain quite limited in countries such as Switzerland, France, Italy, Denmark and Finland, due to the effect of low wage increases.

Economic activities display a fragmented appearance

According to the report; Although the Eurozone will grow by 1.4% in 2025, this rate is largely due to Ireland's higher than expected growth. When Ireland is excluded from the calculation, the growth rate remains at 1%. Although there was an improvement in investments and exports in the last quarter of 2025, private consumption slowed down and the production sector entered recession again. In addition, the slowdown in employment growth and the normalization in real wages did not create an additional acceleration on consumption.

The structural dynamics that shape the medium and long-term outlook of the European economy, especially the stagnation in labor supply, demographic pressures and changing household structures, have significant effects on consumption habits. While the labor supply is expected to show only a limited increase across the European Union between 2025 and 2029, serious divergences between countries stand out. While strong increases are predicted in Ireland, the Scandinavian countries, Spain, the Netherlands, the United Kingdom and Switzerland, thanks to immigration and increased labor force participation; The shrinkage of the working-age population in the economies of Germany, Greece and many Central and Eastern European countries is dragging down the labor supply. In the longer term, the aging population and the shrinking working-age population across Europe are becoming a key factor affecting consumption potential. The rapidly aging population increases healthcare and pharmaceutical expenditures, while partially reducing the demand for durable consumer goods.

This structural transformation creates significant differences between countries: While the share of food and domestic consumption remains high in Central and Eastern European countries, restaurant and accommodation expenditures come to the fore in Southern Europe. While savings rates remain high in countries such as Germany, Czechia, Hungary and the Netherlands, households in Greece and Romania direct all of their income to consumption. All these trends indicate that the consumption composition in Europe will evolve into a more fragmented, differentiated structure according to age and household structure in the coming years.

2026 expectations for consumption and retail

According to the report, households continue to postpone non-essential expenditures. While daily consumption remains strong, a "wait-and-see" approach comes to the fore in large and consistent purchases. In addition, although the easing in inflation has reduced the impact of price increases recently, it is stated that a permanent increase in energy prices may push retail growth back to a price-oriented structure. 

Price increases triggered by uncertainties, especially in the Middle East, significantly change not only the total consumption level but also the composition of consumption.Research data shows that consumers react to price increases by not only reducing their spending but also by re-evaluating their purchasing decisions. This trend reveals that consumers are turning to more affordable alternatives rather than giving up completely, and the "switching to a lower segment" behavior is becoming evident, especially in categories such as home and personal care and food. These dynamics paint a picture consistent with the weakening of brand loyalty and the increasing interest in private label brands across all income groups; More and more consumers across Europe state that they will prefer private label brands in the future.

EY Turkey Partner, Consumer Products and Retail Sector Leader Kaan Birdal made the following evaluations about the report:

“The EY report shows that global geopolitical uncertainties and volatility in energy prices continue to be decisive on consumer behavior. In Turkey, gradual disinflation and improvement in real incomes in 2026 stand out as the most important factors supporting domestic demand. Other On the other hand, it is predicted that global uncertainties and the increase in energy prices will affect consumer behavior, and consumers' spending behavior will become more selective. In terms of the retail sector, this picture shows that both price sensitivity and the search for value have become permanent, while consumers focus on meeting their basic needs, and the price-performance balance is emphasized. This change in behavior requires brands to reshape their product and communication strategies. Therefore, throughout 2026, the sector will be more responsive to the fragmented demand structure and changing consumer priorities. agile response is critical.”

The full research can be found on EY internet It can be accessed through the website.