Investing.com — Wells Fargo analysts said in a note this week that inflation continues to rise faster than the Federal Reserve's target, creating a challenging environment for consumers. However, the bank's analysis suggests that inflation has a very different impact on different groups of consumers.
By examining unique consumer price indexes based on the Consumer Spending Survey (CES), the company identifies demographic groups most affected by inflation.
Income: As expected, Wells Fargo (NYSE:) says the hardest hit by inflation are low-income households, which have faced the biggest price increases over the past year and four years.
The main drivers of this inflation are the rising costs of basic necessities such as housing, electricity and food. Wells Fargo says: “Because lower-income consumers spend a greater share of their spending on necessities, the continued high inflation rate for necessities has weighed on them the most. »
Race/ethnicity: According to Wells Fargo, “Asian households have faced the highest rate of inflation over the past year,” even though they have seen less severe cumulative cost of living increases over the entire cycle. .
The bank adds that Hispanic and Latino households have recently experienced the lowest inflation rates, but over the past four years, they have experienced inflation at the highest levels alongside Black households. “Inflation was lowest for Hispanic and Latino households last year,” Wells Fargo says.
Age: The bank notes that older adults have been hardest hit by rising health care costs, facing the highest inflation rate over the past year. “Meanwhile, Gen
“Households with the lowest incomes saw the largest increase in their inflation-adjusted incomes over the past four years, but the improvement in real incomes occurred during the first two years of the pandemic” , writes the bank. “Gains have eroded more recently due not only to lower nominal income growth, but also to the higher rate of inflation that lower-income households face compared to those with higher incomes. »
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