Impact of Price Increases on Black and Hispanic Households
We have all felt the effects of the rapid rise in prices that started in 2021, but a recent study by the New York Fed reveals that Black and Hispanic households were hit the hardest. Research shows that these households experienced above-average inflation rates throughout most of 2021 and 2022. However, there has been a slight reduction in inflation inequality as the prices of gas and used cars have decreased in recent months.
On average, different demographics have varying spending habits, leading to varying impacts from price increases in different categories. For example, Hispanic households allocate 22% of their income to transportation, while Asian-American/Pacific Islander households only allocate 15%. When prices skyrocketed, particularly for used cars and gasoline, these two groups experienced differing rates of inflation.
Income levels also play a significant role in how individuals were affected by inflation. Initially, middle-income families bore the brunt of the impact due to their higher spending on transportation. However, in the past few months, the bottom 40% of households by income have been hit the hardest, as the inflation is now concentrated in housing and food, which make up a larger portion of lower-income households' budgets.
If you have any questions, comments, or stories to share on this topic, feel free to contact Diccon at dhyatt@thebalance.com.
