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Office of Survey Methods Research
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Published Year: 2025
Survey/Program(s): Office of Prices and Living Conditions
Catalog: Economic Working Paper
WP Number: WP-586
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Rethinking inflation heterogeneity: evidence from national accounts
Abstract
Do low-income households systematically face higher inflation than high-income households? Contrary to prevailing narratives based on the consumer price index, our analysis using personal consumption expenditure price indices demonstrates that inflation inequality has been moderating. Using income-stratified PCE price indices consistent with national accounts, we find substantially smaller inflation gaps than CPI-based studies suggest. This convergence is driven by significant inflation in financial services, primarily impacting higher-income households. Recalculating real disposable personal income growth using corresponding PCE price indices, yields significantly flatter income growth gradients than previously found.