Inflation Has Gone K-Shaped in the Pandemic Like Everything Else
Low-income Americans bore the brunt of job losses when the pandemic arrived. Now they’re getting hit hardest by price increases as the economy recovers.
The headline consumer inflation rate in the U.S. remains subdued, at 1.7% -- but it masks large differences in what people actually buy.
Some of the biggest price hikes of recent months, for example, have come in gasoline. A gallon of regular is up 75 cents since late last year –- adding more than $60 a month to the budget of someone who fills up with 20 gallons a week.
Food-price inflation is running at more than double the headline rate, and staples like household cleaning products have also climbed.
Price increases like these are causing trouble all over the world -- and they tend to hurt low-income people most. That’s because groceries or gas take up a bigger share of their monthly shopping basket than is the case for wealthier households, and they’re items that can’t easily be deferred or substituted.
An analysis by Bloomberg Economics, which reweighted consumer-price baskets based on the spending habits of different income groups, found that the richest Americans are experiencing the lowest level of inflation.
Those same high-earners already posted windfall gains during what’s been labeled a K-shaped recovery from the pandemic. Their net worth surged, thanks to booming stock and real-estate markets -– and they mostly kept their jobs and were able to work from home.