Wells Fargo Annalysts: Inflation Impacts Different Consumer Groups Differently
Wells Fargo analysts have issued a report stating that inflation continues to rise faster than the Federal Reserve’s target, creating a challenging environment for consumers. In their analysis, they found that the impact of inflation varies significantly across different demographic groups.
The bank’s research, based on the Consumer Expenditure Survey, shows that lower-income households have been hit the hardest by inflation, particularly in the rising costs of essentials such as housing, electricity, and food. This is because lower-income consumers spend a larger share of their income on necessities, making them more vulnerable to the effects of inflation.
In terms of race and ethnicity, the report finds that Asian households have faced the highest rate of inflation over the past year, although they have experienced a less severe cumulative rise in living costs over the past four years. Hispanic and Latino households, on the other hand, have seen a lower rate of inflation over the past year, but have experienced some of the steepest inflation rates over the past four years, alongside Black households.
In terms of age, seniors have been most affected by rising healthcare costs, experiencing the highest rate of inflation over the past year. In contrast, Gen-X households have experienced some of the least severe inflation, as they tend to spend more on goods that have seen lower price increases.
The report also notes that the lowest-income households have seen the largest gain in inflation-adjusted incomes over the past four years, but this growth has eroded more recently due to weaker growth in nominal income and a stronger rate of inflation for lower-income households compared to those higher up the income spectrum.
