The diplomatic response, is not to get drawn in. You have to evaluate as to whether she is saying:“Does this dress look nice?” Or, "Do I look fat?" So, try not to get roped in by the word “fat.” “Fat” is an extremely loaded word that can hit people emotionally on so many levels. A better way to answer is, “That outfit is really nice on you.” Or, “That dress could be more flattering.” Even better, turn the question around and ask: “How do you feel in that outfit?” Chances are she's not happy with it but the one she wants could appear frumpy to others. It's a common trait to put oneself under self imposed pressure. Telling a loved one an unpalatable truth can be done, it just needs a little thought, that's all.