Reports from the Congressional Budget Office have revealed that inflation affects the middle-income homes more than lower and higher income households.
Key Details
- Prices have risen faster than middle household’s incomes this year.
- Meanwhile, low and high households have income rising in line with the rising prices, according to a report from the Congressional Budget Office.
- Despite rising interest rates expected to slow the economy, lower-wage jobs have been in higher demand, meaning those in low-income households have seen income increases.
Why it’s news
Rising costs caused by inflation have been a concern for Americans for months, but new data shows that it is mostly the middle-income class that is suffering.
Inflation has remained stubbornly around 8% the past several months despite the Federal Reserve’s attempts to lower it by raising interest rates. However the Fed’s strategy will likely result in sluggish economic growth and increased unemployment.
Even with layoff concerns looming, some areas of the job market are more appealing for workers than others. Lower-wage jobs are in higher demand as more workers are tending to hop from one job to another.
This newer trend of frequent job switching may be one of the reasons lower-income households haven’t been as affected by inflation as middle-income households.
But with prices still rising, every household in the country is sure to feel the effects soon.
Prices on food, for example, have continued to rise, increasing 11.4% from August 2021 to August 2022.
