Differences in consumption patterns between lower- and higher-income households suggest the potential for inflation inequality, but evidence on the scale and drivers of this disparity remains scarce. This column uses 'distributional consumer price indices' to reveal a clear and systematic gap in inflation rates across income percentiles in the US, reflecting the varying consumption patterns of households at different income levels. The findings suggest that a substantial number of individuals considered above the poverty line based on the official Consumer Price Index actually fall below it due to different inflation dynamics, and may be missing out on poverty alleviation programmes.

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30 January 2025

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Vox EU

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https://cepr.org/voxeu/columns/distributional-consumer-price-indices-and-measurement-inequality

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