MNI BRIEF: Effective Inflation Rate Gap Highest In 16 Yrs- ECB

Low-income households are paying a significantly higher effective inflation rate than the euro area's highest earners, the ECB’s latest Economic Bulletin reports, while being forced to use five to six times more of their savings than those in the wealthiest quintile to cover sharp increases in energy costs, causing potential

“The gap between the effective inflation rates experienced by those in the lowest and highest income quintiles, calculated using data on household consumption patterns, is at its greatest since 2006,” the Bulletin states. “Additionally, low-income households consume a larger share of their income, save less and are more liquidity-constrained than high-income households; they therefore have less room to buffer sharp increases in their cost of living through savings.”

Low-income households have a median saving rate of -6.4%, while for top earners the figure is + 39.3%.