Title: Consumer price index differentials among Polish households
Authors: Aleksandra Halka - Narodowy Bank Polski (Poland) [presenting]
Abstract: The aim is to investigate how the inflation perceived by the households differs with respect to the level of income. In order to estimate the scale of inflation differentiation, we divide the sample of households in Poland according to income into four quartile groups and calculate CPI for the respective groups. We focus on the difference in inflation between the group with the lowest and the highest income, which we call inflation inequality. Our results indicate that in Poland, the lowest-income households generally experienced higher inflation than the highest-income households. This is mainly due to the higher growth of food prices with the persistently significant disproportion in the share of food in the consumption basket of income groups. At the same time, inflation inequality is limited mainly by the prices of services. Inflation inequality increased after the outbreak of the pandemic in 2020, partly also due to a relatively greater increase in income in the fourth quartile group compared to the. However, in 2021 the inflation inequality was relatively low, which we attribute to the similarity of baskets of various income groups as a result of the restrictions related to COVID-19. However, the decline in inequality was short-lived, and in 2022 we observe a sharp rise in inflation inequality. We also find that the social policy (the Family 500+ program) aimed at reducing income inequalities lead to a significant reduction in the scale of income inequality.