Inflation is higher for the worse-off

Submitted by Matthew on 22 June, 2011 - 11:22

New research from the Institute for Fiscal Studies shows that the rate of inflation is systematically higher for the worse-off than for the well-off.

Over the eleven years 2000-10, the inflation rate for the poorest 20% of households averaged 3.4%, and for the top 10% of households, 2.9%.

The difference looks small, but, accumulated, means a 7.5% difference in total inflation over the eleven-year period.

The general reason is that prices of things that poorer people spend most on, like food, fuel, and housing, usually rise faster than prices of, for example, electronic gadgets.

The exact figures differ from year to year. There have been years in which inflation was higher for the well-off than for the badly-off. In 2009, however, inflation was over 3% for the bottom 20%, and less than 1% for the top 20%.

The labour movement needs to compile our own working-class cost-of-living index, instead of relying on catch-all official figures.

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