Low-Income American Households Suffer Inflation Shock From Virus
- Bloomberg Economics says virus lifting grocery, housing costs
- Economists says inequality in inflation poses challenge to Fed
The coronavirus is inflicting a price shock on low income Americans that risks further driving up inequality.
In a study released this week, Bloomberg Economics estimated higher grocery and housing costs for lockdown necessities meant those households whose incomes are in the bottom 10% currently face inflation of 1.5% compared with 1.0% for the top 10% and the official 0.1% overall average recorded in May.
The explanation for the difference lies in how the Covid-19 pandemic has changed consumption patterns by forcing households to buy more food while spending less on transportation or recreational activities.
“In a period of protest and increasing anger about inequality, the differential inflation rate experienced by low- and high-income households is a concern,” said Bloomberg Economics’ Björn van Roye and Tom Orlik.