In June, the U.S. Bureau of Labor Statistics (BLS) announced the largest 12-month increase in the Consumer Price Index for All Urban Consumers (CPI-U) since 1981. Although inflation has moderated somewhat, it still remains very high. The question is the extent to which the effects of inflation vary for households with different income levels.
This brief addresses the distributional question with a straightforward analysis that weights the eight major categories in the CPI-U by expenditure data from BLS’s Consumer Expenditure Survey (CEX) for each income quintile. The confounding issue, however, is that low-income households spend virtually all their after-income-tax money on inflation-affected items, while high-income households spend only 80 percent of their resources on these items.
Since 2018, First Eagle Investment (Trades, Portfolio)s has collaborated with the Boston College Center for Retirement Research (CRR) to develop actionable insights and tools for plan sponsors, consultants and financial professionals. Leveraging CRR’s decades of scholarly research and First Eagle’s many years of practical experience, together we are committed to serving as a steadfast resource in support of American workers’ journey toward secure retirement.
This content is part of a series of wide-ranging insights that explore key challenges that retirement savers face in the years leading up to and while in retirement. Additional topics address how different workers save in their company-sponsored retirement plans, what affects spending in retirement, and the impact of healthcare expenses for different segments of the retiree population.
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