Analysis shows: Inflation places a particularly heavy burden on low-income households

Analysis shows: Inflation places a particularly heavy burden on low-income households

According to a report by taz.de, inflation last year put a heavy burden on poorer households in particular. The inflation rate for singles with an income of a maximum of 900 euros per month was 6.3 percent, while singles with an income of 5,000 euros or more per month only recorded an inflation rate of 5.3 percent. Overall, the inflation rate was 5.9 percent last year, which represents a slight decrease compared to 2022, but is still well above the European Central Bank's target of 2 percent.

The analysis by the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation shows that low-income households suffered particularly from the price increases until late summer 2023. This is because poorer people spend a larger share of their income on food and energy. Natural gas prices rose by 14.7 percent, electricity prices by 12.7 percent and food prices by 12.4 percent. Without these price increases, the inflation rate would have been significantly lower.

This development has a significant impact on the market and the financial industry. The rising prices for energy and food are particularly affecting low-income households, as they have to spend a larger part of their budget on these areas. This leads to lower purchasing power and can further exacerbate economic inequality. Additionally, this could have implications for monetary and interest rate policy as central banks may strive to keep inflation in check.

Overall, IMK's analysis highlights the urgent need to take measures to alleviate the economic burden on low-income households and shows the complexity of inflation dynamics in relation to different household types.