In the last two years, households faced a sharper inflation shock that affected families in varied ways. People on the lower end of the income scale felt the impact most strongly, while higher‑income households saw a somewhat milder rise. During 2021 and 2022, inflation added 1.8 points to the annual rise for the poorest quarter of households, a gap policy makers described as a meaningful material difference. This point stood out during discussions at the annual gathering of the European Economic Union in Barcelona.
Across the two years, households endured a steady climb in prices. The overall increase translated to 11.5 percentage points for many families, yet the effect was uneven. The 25th percentile, representing the lower half of earners, faced a 12.4 point rise, while middle‑income households saw about 11.5 points. The wealthier quartile endured roughly 10.6 points. By age, the total CPI impact over the period varied: household heads under 40 logged about 10.6 points, those aged 40–60 about 11, and those over 60 about 12.4 points.
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Different age groups, income levels, and wealth profiles mean families purchase different baskets of goods and services. When price increases do not hit all categories equally, individuals who spend more on pricier items experience a higher personal inflation rate. In practical terms, people consuming more goods and services that have risen sharply will feel a larger erosion of real wealth, as noted by the policy expert involved in the discussions.
Energy and food weigh most on the budgets of the poorest households
For low‑income families, energy and food dominate monthly grocery bills. The elderly follow a similar pattern, though indexed pensions help cushion some retirees against the surge in prices. Wage‑earner households, in contrast, often see only partial adjustments to price increases, leaving their budgets more vulnerable to inflation shocks.
Critics urged policymakers to move beyond broad measures and target support where it is most needed. The anticipated budget impact of inflation was estimated to range from about 15% to 20% over 2021–2025 for the most vulnerable groups. There was also an expectation that monetary policy would continue to tighten, pushing higher interest rates through the central bank to rein in price growth. This dynamic tends to raise debt service costs for households with variable‑rate loans, especially those with limited access to affordable banking options and lower incomes.
For readers in Canada and the United States, the discussion highlights similar inflation dynamics. Energy and food costs tend to dominate lower‑income baskets in those countries as well, particularly when pension indexing is not automatic and household debt varies widely. Economists emphasize that price growth is not uniform across products and regions, and personal inflation depends as much on individual consumption patterns as on policy steps. The broader takeaway is that inflation is a lived experience shaped by income, age, debt, and the specific goods a family buys each month.