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CRR Analyzes How the Effects of Inflation Differ by Household Income
On September 27, 2022, the Center for Retirement Research (CRR) at Boston College released its issue brief, How Much Does Inflation Vary by Income? Depends on How It’s Measured. In June 2022, the U.S. Bureau of Labor Statistics (BLS) reported that the increase in the Consumer Price Index for All Urban Consumers (CPI-U) reached 9.1%, marking the largest 12-month increase since 1981. CRR analyzed the extent of the effects of inflation that varied for households with different income levels.
Some key findings include:
- The results indicate that low-income and high-income households encounter similar inflation rates for items included in the CPI.
- Generally, high-income households can afford to save more, so a considerable share of their income is less affected by current high inflation than low-income households.
- Although high-income households will eventually spend their savings, typically they will have time to shift their consumption patterns to prepare for the subsequent impacts of inflation.
The CRR analysis was based on combined data from the Consumer Price Index (CPI) and the Consumer Expenditure Survey.
The brief is available here.