Where the shoe pinches

Updated: Aug 29 2008, 04:32am hrs
Old-fashioned Russians love kefir, made from fermented milk; in Vietnam, there is a kind of cold coffee, called ca phe sua da, made with sweet, condensed milk. Consumption of both these tipples is sagging, after a jump in the price of the dairy products they contain.

Almost everywhere in the world, people are feeling the pinch because of higher food and fuel prices. But levels of optimism and pessimism, and the ways in which people act on their mood, seem to vary in a peculiar way, according to Nielsen, a marketing-information firm. And the countries where people complain most about feeling squeezed are a mixture (see chart) of rich and poor.

Some findings confirm stereotypes: if they have any spare money, consumers in the Asia-Pacific region are more inclined to save it than to splurge. Some 57% of them say they put any disposable cash straight in the bank. For Russian consumers, who only 15 years ago had little to consume at all, clothing is a priority: over two-thirds say their wardrobe is the most likely beneficiary of any spare funds they have. People in Nordic countries view a holiday as a necessity, whereas Brazilians seem happier to stay at home.

Across the world, people want to save money on food, but shopping habits vary a lot. In Latin Americawhere staples such as powdered milk, cooking oil and rice have risen in price by up to 40%people say they are now more likely to buy food frequently and in modest amounts. In both Europe and America, the response is the opposite: people who drive to hypermarkets in search of the best bargains say they are doing so less often than before, in part because the cost of filling their tank has gone up.

At least in rich countries, the rise in the price of food (and the share of the family budget it absorbs) has to be kept in perspective. Some 50 years ago, about 30% of household income in Britain went on food; now it is half that. Shoppers of an earlier generation would be startled to learn that Britons bin a third of the food they buy, and Americans not much less.

In rich countries, there has been a spurt of interest in using leftovers, but so far this is a middle-class fad; whether ordinary folk will follow is still uncertain.

In Europe, consumers now buy food in the way they purchase clothes: going downmarket for basics and splurging on the odd treat. Gourmet chocolate bars are the equivalent of a designer handbag. In fact, cost-conscious consumers may start buying more fancy food than before, to make up for going out to restaurants less.

For many, spending for pleasure is impossible: around one-fifth of respondents in Britain, Germany and France say they have no spare cash after covering the basics. A quarter of Americans say the same. But some habits are immune to gloom. Eight out of ten American adults say they still go to the cinema; maybe spine-chilling movies like The Dark Knight make real life more bearable.

The Economist Newspaper Limited 2008