Household-specific inflation: differences by income group

Household-specific inflation: differences by income group

Beyond the official monthly inflation data, the trade union-affiliated Institute for Macroeconomics and Business Cycle Research (IMK) has developed its own “IMK Inflation Monitor” to analyze how badly different sections of the population are affected by inflation. The study focuses exclusively on the price increase of various consumer expenditures, without taking into account the loss of purchasing power of savings due to inflation. According to Silke Tober and Sebastian Dullien from the IMK, an interesting development can be observed in this “household-specific inflation”. While low-income households had to cope with significantly higher inflation on average in 2022 and 2023 than households with higher incomes, their inflation rate in March 2024 was below average.

This data suggests that inflation may now be hitting the wealthier classes harder than before. Although the exact reasons for this trend remain to be analyzed, there are conjectures as to why low-income households experience a relatively lower inflation rate. This could be caused by various factors, such as targeted government support measures or an adjustment in consumer behavior due to increased prices.

The findings from the “IMK Inflation Monitor” make it clear that the effects of inflation are unevenly distributed and affect different population groups to different degrees. This development could also stimulate political discussions about measures to provide relief for lower-income households to ensure that the economic burden is distributed fairly. It remains to be seen how this trend will develop in the coming months and what specific impact it will have on society as a whole.