Differences between low and high incomes
The figure shows that not everyone experiences inflation in the same way. The lowest income groups have the greatest concerns about inflation, which is unsurprising. They tend to worry more about their savings. They experience greater levels of stress, and they worry about paying their monthly bills. Higher-income households tend to feel the impact to a lesser degree. They are more likely to say that price increases have little impact on them.
It is striking that job security is not a major concern for either group. Only a small proportion of people are worried about losing their jobs.
Why inflation affects behaviour
When faced with money worries, people tend to adjust their spending. They spend less and are more likely to put money aside.
This has implications for the economy:
This effect may persist for a long time, even if prices rise at a slower rate.
The role of uncertainty and the economy
How people experience inflation also depends on broader circumstances. When unemployment is low, people tend to feel somewhat more confident about finding a job. Major events, such as an energy crisis, can actually exacerbate people’s concerns. Personal experiences from the past are play a major role. All these factors mean that households experience inflation differently.