The food inflation crisis in the developing world has been front-page news. But spiraling food prices are much of a developed world problem, too.

The highest inflation in 50 years has forced them to change their shopping and eating habits—including cutting back on how much they tuck away at meals.

Call it “dietflation”.

A poll last year by the firm Consult showed that not only had 72% of Americans taken steps to save money on food, 53% had significantly changed their eating habits.

At first, Americans traded down to cheaper alternatives, according to Sean Connolly, chief executive officer of Conagra Brands—which makes everything from Slim Jim snacks to Vlasic pickles.

But during Conagra’s recent earnings call, Connolly hinted this has now changed. Since early April, U.S. consumers have just done without certain types of foods, he said.

Fasting’s financial fallout

Some food companies, like Conagra, have been able to offset lower sales volumes by raising prices. In fact, it reported a 2.2% increase in its revenues in the second quarter of this year.

But producers of the types of foods that consumers are now shunning could suffer.

These include meat, frozen meals, fruit juice, and soups, according to research firm NIQ. If consumers refuse to buy them, price increases will not do their producers any good.

For consumers, the financial fallout of food inflation has hit home with each trip to the store.

In a recent study, NIQ reported that food prices jumped 11% in the past year, adding an additional $760 to the average household’s grocery bill. “Shoppers are spending more, but consuming 2% fewer items, forcing them to scrutinize their choices,” the report says.

Dietflation and its consequences seem to be a problem in all developed countries.

In France, food prices drove consumption down 10% below normal pre-Pandemic levels this spring, according to Joseph Politano of Apricitas Economics.

Dietflation chats

In the U.K., the number of people without access to enough healthy food has increased by 57% since early 2022, according to Purity Hrisca, Technical Manager of the grocery store chain Sainsbury’s.

And polls from both the U.S. and Europe show that food prices are Western consumers’ number one economic concern now, outstripping transportation, housing, and energy inflation.

Most food companies, by contrast, are holding their own.

Like Conagra, they are passing their pain on to consumers by raising prices. Granted, the industry has not taken part in this year’s big stock market rally, but it has not tanked either.

At the beginning of August, the S&P 500 Food Products Industry Index was about 1.5% higher than it was a year earlier.

Jam tomorrow

To belt-tightening Western consumers, affordable food might seem like “jam tomorrow” - the White Queen’s cynical promise to Alice in Lewis Carroll’s Through the Looking Glass of a reward that will never come. But economists are hopeful.

This year, they admit, looks grim.

The USDA predicts that all U.S. food prices will increase 5.8% in 2023, with the price of food eaten at home increasing 4.9%, and restaurant prices increasing 7.5%.

But next year, the bean sellers’ bean counters at the USDA think prices will rise a more normal 2.4%.

If that is the case, and wages continue to rise, consumers in Western countries may be able to let their belts back out—at least a notch or two—once again.