Topline
Black and Hispanic Americans are affected more by record inflation than other groups, according to research published Thursday by the New York Federal Reserve, in one of the first studies of how recent soaring inflation impacts demographic groups that adds to mounting evidence of Black and Hispanic households disproportionately feeling the economic burdens since the beginning of the Covid-19 pandemic.
A customer shops for produce at a grocery store earlier this month in California.
Key Facts
Hispanic Americans are currently experiencing 0.6% worse inflation than average and Black Americans are experiencing 0.2% worse inflation than average, the New York Fed said in a blog post.
The New York Fed calculated this by using a weighted average of the goods used in the consumer price index’s goods basket, calculating inflation to be 9.2% overall by this metric, surpassing the four-decade high 8.6% inflation from May’s consumer price index.
The New York Fed wrote that its calculations still “likely underestimate the actual gaps” in inflation for these demographic groups.
The disparities in inflation among demographic groups are more than twice as large than they were in 2019, indicating the situation has been made worse since the beginning of the Covid-19 pandemic.
This builds off of several data points indicating Black and Hispanic Americans have been affected more economically since the beginning of the pandemic, including Black and Hispanic Americans experiencing worse unemployment rates than white Americans as well as becoming more likely to struggle to make rent or mortgage payments.
Key Background
Generally, high inflation impacts lower-income households more as they tend to spend a higher proportion of their income on goods with prices more likely to be impacted by inflation, according to research from the Brookings Institution. These households spend more on basic needs such as food and transportation, which have been among the categories that have risen the most in price over the last year. The most recent Labor Department data found gas prices 48.7% from May 2021 to May 2022 while food prices rose 10.1% in that 12-month period.
Surprising Fact
Disappointing recent earnings results from retailers Target and Walmart come as consumers are beginning to spend less on discretionary items. Consumers are starting to buy less expensive private-label goods and are buying less nonessential items like apparel and electronics, Tom Essaye, an analyst at Seven Reports, pointed out in a note earlier this month. This is evidence that “consumers are starting to get squeezed by inflation,” Essaye wrote.
Further Reading
Inflation is higher for some demographic groups, report finds (Axios)
Inflation could wreak vengeance on the world’s poor (Brookings)
‘Survival mode’: Inflation falls hardest on low-income Americans (Washington Post)
Student Loans, Mortgages, Credit Cards: Here’s What Will Cost More As Fed Raises Interest Rates (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/07/01/black-and-hispanic-households-hit-harder-by-inflation-on-top-of-economic-inequality-caused-by-the-pandemic/