Working Paper: NBER ID: w22331
Authors: Greg Kaplan; Sam Schulhofer-Wohl
Abstract: We use scanner data to estimate inflation rates at the household level. Households' inflation rates have an annual interquartile range of 6.2 to 9.0 percentage points. Most of the heterogeneity comes not from variation in broadly defined consumption bundles but from variation in prices paid for the same types of goods. Lower-income households experience higher inflation, but most cross-sectional variation is uncorrelated with observables. Households' deviations from aggregate inflation exhibit only slightly negative serial correlation. Almost all variability in a household's inflation rate comes from variability in household-level prices relative to average prices, not from variability in aggregate inflation.
Keywords: No keywords provided
JEL Codes: D12; D30; E31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower-income households (R20) | cumulative inflation rate of 33% for households earning below $20,000 (D19) |
| higher inflation (E31) | rising inequality in real incomes faster than in nominal incomes (D31) |
| differences in prices paid for identical goods (P22) | variation in household-level inflation rates (D19) |
| mix of goods (H44) | variation in household-level inflation rates (D19) |
| 91% of the variance in a household's inflation rate stems from household-specific price variations (D19) | limited relevance of aggregate inflation for individual households' inflation experiences (D19) |
| entire distribution of household-level inflation closely tracks aggregate inflation (D39) | distribution does not shift in tandem with aggregate trends (D39) |