** RBC sees the "relatively mature" European food retail sector continuing to grow slightly above GDP over the mid-term, driven by online sales, premium food and turnaround opportunities

** It notes that food inflation — a key driver of sentiment in this sector — is set to rise to 3% from the fourth quarter of 2026 before falling again in 2027

** The broker initiates coverage across the sector, assigning "outperform" ratings to Carrefour CARR.PA and Jerónimo Martins <JMT.LS>, and "sector perform" ratings to Ahold Delhaize AD.AS and Colruyt COLR.BR

** Carrefour is RBC's top pick, with the broker citing the company's "more focused approach" and potential for improved profitability and earnings

** Carrefour shares are up 3.5% in Tuesday morning trade

** RBC also likes Jerónimo Martins and Sainsbury's SBRY.L for their improvement potential given low valuations relative to history

** The broker sees Ahold Delhaize and Tesco TSCO.L as already priced for their growth potential

** "Colruyt faces a difficult Belgian market backdrop and unfavourable regulatory shifts," the broker says