Dec 24

　　The French do not live by bread alone. But when the average price of the iconic baguette topped 1 for the first time last month, consumers from Picardie to Provence shuddered with apprehension. The price of the omnipresent crisp, golden loaf seemed to epitomize the rising cost of living and the shortage of cash in consumers' pockets. "If people see the price of a baguette go up while their buying power is stagnant or going down, well, they complain a little," says baker Jean-Pierre Cohier, who supplies baguettes to the French presidential palace.

　　In fact, they're complaining a lot about French President Nicolas Sarkozy, who came to office last May with a vow to be "the purchasing-power president." Unfortunately for him, in France and much of the rest of the world the rapidly inflating price of food is creating a dark mood about the cost of living that even the famously energetic "omni-president" Sarkozy can't dispel. Food inflation used to be seen as a problem mainly for developing countries. Now the bite, as it were, is being felt in the heart of Europe.

　　The issue may be arising first in France because the country spends so much of its income on eating—about 14 percent of total household spending, versus 7 percent in the United States. "The perception of inflation seen from the consumer side took off in August and since then is really skyrocketing," says Eric Chaney, who is Morgan Stanley's chief economist for Europe, "and the only rational reason for that perception is the rise in food prices."