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

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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.

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  • Andre Luduvice & Anaya Truss-Williams & Christopher J. Walker, 2025. "Did Inflation Affect Households Differently? A Look at the Postpandemic Inflation and Wage Growth Dynamics," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2025(11), pages 1-11, October.
    • Handle: RePEc:fip:fedcec:101885
    DOI: 10.26509/frbc-ec-202511
    Note: Replication materials for this Economic Commentary may be found at github.com/avdluduvice/LuduviceTruss-WilliamsWalker_InfWageGrowth.
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    1. Xavier Jaravel, 2021. "Inflation Inequality: Measurement, Causes, and Policy Implications," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 599-629, August.
    2. Kaplan, Greg & Schulhofer-Wohl, Sam, 2017. "Inflation at the household level," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 19-38.
    3. Congressional Budget Office, 2021. "The Distribution of Household Income, 2018," Reports 57061, Congressional Budget Office.
    4. Xavier Jaravel, 2019. "The Unequal Gains from Product Innovations: Evidence from the U.S. Retail Sector," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 715-783.
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