Answer: Pepper plants lose their leaves for a variety of reasons. Plants do respond to drought conditions by dropping their older leaves - in this case, the lowest leaves on the plant - first. They turn yellow and fall prematurely. This could be coupled with heat stress, given our hot, dry and sunny weather.
Overwatering can also cause leaves to yellow and drop. Gardeners can kill their plants with kindness during hot, dry weather by watering too much, too frequently. Many plants look a little wilted during the heat of the day - they curl their leaves slightly to minimize moisture loss through transpiration during very hot weather - but recover when the sun sets. Watering them even more when they appear wilted can lead to root rot. Apply the water to soil as much as possible, rather then dousing the plant. This puts it at the root system where it is needed, and keeps the foliage as dry as possible to reduce the incidence of disease problems.
If you apply high nitrogen fertilizers - especially during hot weather when the plants are under drought stress - you can burn them, which will also cause leaf drop.
Although you do not mention any kind of spots on the leaves or fruits, peppers are susceptible to a number of diseases that can cause the leaves to yellow and drop prematurely. These include cercospora leaf spot, a fungal disease whose symptoms include round or oblong spots on the leaves and stems. These spots often have light gray centers with dark brown borders. Infected leaves turn yellow and drop when the disease is severe.
This may not completely answer your question, but you are more aware of the cultural and growing conditions than I, so maybe these clues can help you determine just what the problem might be. The good news is, in my garden at least, when ornamental pepper plants drop leaves they typically replace them with healthy new leaves as the season progresses. So, with any luck, your pepper plants will leaf out again. Hope so!
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