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Did Inflation Affect Households Differently? A Look at the Postpandemic Inflation and Wage Growth Dynamics

Year: 2025

Type: article

Abstract: We analyze the heterogeneous effects of postpandemic inflation and disinflation by inspecting inflation and wage growth experienced across quintiles of household income and wage distributions. We find that after inflation peaked in June 2022, households and workers in the bottom 40 percent of the income and wage distributions have consistently experienced both higher inflation and higher wage growth when compared to the middle 40 and top 20 percent of these distributions. Comparing the cumulated growth of both variables, we observe that the bottom and middle 40 percent reach the end of 2024 with 4.5 percentage points more of cumulated wage increase than inflation since January 2019, while the top 20 percent ended the same period with close to 3.5 percentage points of increase in their cumulated purchasing power.

Source: Economic Commentary (Federal Reserve Bank of Cleveland)

DOI: 10.26509/frbc-ec-202511

Authors: André Victor D. Luduvice, Anaya Truss-Williams, Christopher J. Walker

Institutions: Federal Reserve Bank of Cleveland, Federal Reserve Bank of Dallas

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, Decent work and economic growth, No poverty

Open Access status: diamond

OpenAlex ID: W7084497994

FWCI: 2.841

Cites: 10

Cited by: 3

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