Rising food prices have sparked a slowdown in consumer spending. Could they also herald major economic turmoil?

With National Statistics confirming that food prices are firmly rising, what matters more is that this is becoming accepted as normal. Last week the Governor of the Bank of England gave another statement (the latest in a long line) warning that rising prices such as food and fuel are now being built into expectations. Bye bye everyday low prices; hullo everyday inflationary pressures.

The political implications are immense. For decades, policy-makers have relied on supermarkets to drive down prices. It's been a keystone in the unwritten political bargain of late 20th-century consumerism. Less money on food delivers more money for other consumer spending.

Mervyn King was showing his grasp of mass psychology. The issue is not just the actual prices but the impact on people's expectations. Everywhere I've gone this past few weeks, retailers tell me there is a squeeze on. Even my street market is feeling the pinch. People are just being tighter with their money, even if they have loads in the bank. Caution and uncertainty are replacing spend, spend, spend.

One half of me knows this is not before time, actually. The consumerist dream is the motor force behind planetary overload. Consuming less, not just differently, is central to any vision of a 21st-century sustainable economy. The other half of me knows this current credit crunch could herald a really major economic crisis. Not without reason are speculators diving into food commodities as a hedge. The need for food doesn't go away. But rising commodity prices merely exacerbate the food inflation worrying the governor.

This would all be academic if it were not already so serious. Globally, the picture is dire. For the average British family accustomed to spending 9% of household income on food (with about 5% more on eating outside the home), food inflation is irritating. For the family on low income it's terrible, which is why the discounters will probably benefit. But for countries where households spend 30% or 50% of disposable income on food, the doubling of rice (now likely to hit $1,000 a tonne) and the price of wheat (already more than £150) is devastating.

The new geo-politics is already here. Vietnam, Egypt and India have banned rice exports. This comes after Argentina had saucepan rallies, Mexico rioted and China halted its biofuels programme. These are serious warnings. As ever, poor countries and poor people are the canaries for the food system.n

Tim Lang, professor of food policy, City University