Household-specific inflation: Differences between income groups

Household-specific inflation: Differences between income groups

Beyond the official monthly inflation statistics, the Institute for Macroeconomics and Business Cycle Research (IMK) reveals the uneven impact of inflation on different social classes in its own “IMK Inflation Monitor”. The focus is on the rising costs of various consumer goods, without taking into account the loss of purchasing power of savings due to inflation. According to information from Silke Tober and Sebastian Dullien from the IMK, an interesting development is emerging in this “household-specific inflation”. While low-income households were confronted with a noticeably higher rate of inflation than high-earning households in 2022 and 2023, they experienced a below-average inflation rate in March 2024.

This shift in the burden of inflation between low-income and wealthy households raises questions and highlights the complex impact of economic developments on different population groups. In particular, the discrepancy between inflation rates in 2022, 2023 and the current level in March 2024 highlights the volatile conditions that households face. The IMK Inflation Monitor not only shows the general development of inflation, but also highlights the social inequality in cost burdens.

It remains to be seen how this unequal inflation burden will develop in the future and what measures will be taken by politicians to ensure a fairer distribution of the costs. The IMK's current findings underline the importance of a differentiated view of the effects of inflation on different population groups and the need for targeted policies to support low-income households in times of rising prices.