I think we can sa...s that different demographic groups appear to have different inflation experiences, as this research by Hobjin, Mayer, Stennis, and Topa indicates.
For example, let's take a look at the difference between the inflation experiences of two households. The first is a single older female (over 55 years of age) who rents her home and has a relatively low income (less than $30,000 a year). The second is a young couple (younger than 35 years old) who own their home and have a high income (over $70,000 annually). Both households have high school educations. Recently, the difference between the inflation experiences of these two demographic groups has opened up to a sizable 2.0 percentage points (see the chart). Why?
Well, the spending habits of these two groups contain a few striking differences. For example, the older female spends a lot more of her household income on food at home, rent, and medical care than the young couple does (see the table). Also, the young couple appears to spend a larger fraction of their income on transportation (a large portion of which is gasoline).
Comparison of myCPI Weights
| ||
Average of the previous five years (through December 2014)
| ||
A young couple, homeowner, high income, high school education
|
Older female, renter, low income, high school education
| |
| Food at home |
7.2
|
14.4
|
| Food away from home |
5.4
|
2.8
|
| Shelter |
23.2
|
39.8
|
| Utilities |
6.4
|
8.5
|
| Household operations |
1.0
|
1.2
|
| Household furnishings and equipment |
2.8
|
1.3
|
| Apparel |
2.2
|
1.7
|
| Transportation |
23.5
|
7.5
|
| Medical care |
4.1
|
11.3
|
| Recreation |
5.1
|
3.6
|
| Education |
0.7
|
0.2
|
| Other |
18.2
|
7.7
|
Note: "Other" includes personal care, alcohol, tobacco, reading, and miscellaneous goods and services
Source: Author's calculations based on the BLS's Consumer Expenditure Survey | ||
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