Can Consumers Afford Healthy and Sustainable Diets? Global Evidence from Inflation, Food-System Shocks, and Healthy Diet Costs

Technical Summary: Can Consumers Afford Healthy and Sustainable Diets?

Problem Statement
The transition toward sustainable food consumption is widely recognized as essential for improving human health, reducing environmental pressures, and advancing global food-system transformation agendas (e.g., SDGs, EU Farm-to-Fork). However, the adoption of healthy and sustainable diets is fundamentally constrained by affordability. While behavioral and informational interventions are frequently studied, the macroeconomic conditions determining whether consumers can economically access these diets remain under-explored. Specifically, there is a lack of cross-country evidence regarding how recent global inflationary pressures and post-2021 food-system shocks (arising from supply-chain bottlenecks, energy volatility, and geopolitical instability) have altered the cost of a healthy diet. This study addresses the gap by investigating whether these macroeconomic disruptions have created structural affordability barriers that undermine the economic feasibility of sustainable dietary transitions.

Methodology
The study employs a fixed-effects panel regression model using annual country-level data from 165 countries covering the period 2017–2024.

• Dependent Variable: The Cost of a Healthy Diet (CoAHD), measured in purchasing power parity (PPP) dollars per person per day. This indicator, developed by the FAO, represents the minimum cost of meeting healthy dietary recommendations using locally available foods and nationally representative prices. It serves as an affordability-related indicator rather than a direct measure of consumption behavior.
• Key Explanatory Variables:
  • Inflation: Measured by annual consumer price inflation (winsorized at the 1st and 99th percentiles to mitigate extreme outliers).
  • Post-2021 Shock: A binary indicator variable equal to 1 for the years 2022–2024 and 0 for 2017–2021, capturing the period of intensified global food-system disruptions.
• Control Variables: Log GDP per capita (economic development), urbanization rate (share of urban population), and log population size.
• Empirical Strategy: The analysis utilizes country fixed effects to control for unobserved, time-invariant country-specific characteristics (e.g., geography, institutional quality, dietary traditions). Standard errors are clustered at the country level to account for serial correlation and heteroskedasticity. The study tests four hypotheses regarding the positive association of inflation and urbanization with diet costs, the independent effect of post-2021 shocks, and the influence of economic development. Robustness checks include alternative inflation measures, year fixed effects, and nonlinear GDP specifications.

Key Results
The empirical analysis yields three primary findings:

1. Significant Post-2021 Cost Increase: The cost of a healthy diet increased significantly during the 2022–2024 period. In the full model, the post-2021 shock is associated with an increase of approximately 0.72 to 0.79 PPP dollars per person per day. This increase persists even after controlling for general inflation, suggesting that food-system disruptions created additional affordability pressures beyond standard price inflation.
2. Positive Association with Inflation: Inflation is positively and significantly associated with healthy diet costs. Higher consumer price inflation correlates with higher costs for nutritious diets, indicating that macroeconomic instability weakens the economic access to healthy foods.
3. Heterogeneity Across Income Groups:
   • Post-2021 Shock: The increase in healthy diet costs following 2021 was broadly shared across countries at all levels of economic development (from the lowest to the highest GDP-per-capita quartiles).
   • Inflation Effects: The impact of inflation varied by income group. Inflation significantly increased healthy diet costs in the lowest GDP-per-capita quartile. In the highest quartile, the inflation effect was negative and significant, while it was statistically insignificant in middle-income groups. This suggests that the transmission of inflation to diet costs is mediated by national market structures, purchasing power, and policy capacity.
   • Urbanization: Urbanization is consistently and positively associated with higher healthy diet costs across specifications.

Key Contributions
The paper makes three specific contributions to the literature on sustainable food consumption:

1. Macroeconomic Integration: It integrates macroeconomic conditions into the sustainable food consumption debate, demonstrating how inflation and food-system shocks shape the "affordability pathway" through which consumers access healthy diets.
2. Post-2021 Evidence: It provides novel cross-country evidence quantifying the impact of post-2021 food-system disruptions on healthy diet costs, distinguishing these effects from general inflationary trends.
3. Distributional Analysis: It examines the distributional consequences of these shocks, revealing that while affordability pressures are widespread across income groups, the mechanisms (specifically the inflation effect) differ significantly between low-income and high-income nations.

Significance and Claims
The study claims that affordability is a core pillar of sustainable food consumption, acting as a structural filter between dietary intention and actual consumption behavior. The findings suggest that behavioral interventions, food labeling, and informational campaigns are insufficient if healthy and sustainable diets remain economically inaccessible due to macroeconomic instability.

The paper argues that sustainable dietary transitions are not solely a matter of consumer preference or awareness but are constrained by the economic feasibility of food choices. Consequently, policies aimed at promoting sustainable diets must complement behavioral strategies with measures that:

• Strengthen food-system resilience against shocks.
• Reduce excessive price volatility.
• Improve economic access to nutritious foods, particularly for vulnerable populations.

By highlighting the link between macroeconomic instability and the cost of healthy diets, the study contributes to policy debates surrounding the SDGs, the One Health framework, and the EU Farm-to-Fork agenda, emphasizing that transformative food-system changes require addressing affordability as a primary condition rather than a secondary concern.