This is a follow up to this posting from yesterday. Perplexity ai answers the question: "Does rising inflation lower unemployment?"
And the answer is (using perplexity ai pro version):
Inflation has affected different income groups in the following ways:
- Low-income households spend a larger fraction of their budget on necessities like gasoline, heating, food, and rent. When prices for these goods rise faster than overall inflation, it disproportionately hurts lower-income families who have less ability to absorb the shock
- .
- In January 2022, for the lowest 40% of income earners, expenditure on essential categories like energy, transportation, shelter and food accounted for approximately 84% of after-tax income versus only 32% for the highest income quintile. This leaves lower income groups little room to adjust spending to avoid rising prices
- .
- As of June 2023, 85.7% of individuals in households earning less than $50,000 reported being significantly stressed by inflation, compared to 60.2% for those earning over $100,000 - a 25.5 percentage point difference
- .
- To cope with inflation, low- and moderate-income households have more frequently cut back on necessities like nutritious food and medical treatment, taken on debt, and worked additional hours compared to higher income groups
- .
- Inflation can erode the real value of savings and fixed incomes, hurting retirees and those with limited ability to increase their earnings. However, it can also reduce the real value of existing debts, benefiting borrowers
In summary, inflation tends to have a more acute impact on lower-income groups who spend a larger share of their budget on essentials and have fewer options to adjust their spending or increase their income in response to rising prices.
Related
how does inflation affect the purchasing power of different income groups
what are some strategies that low-income households use to cope with inflation
how does inflation impact the retirement savings of different income groups
Comments