The Distribution of Inflation among Austrian Households

We estimate the distribution of household-level inflation and show a strong and stable negative relationship between income and inflation that reflects the differences in consumption bundles along the income distribution (2010–2012). Inflation decreases as education levels increase. It is especially high for blue-collar worker households and extraordinarily low for farmer households and shows a u-shaped relationship with age. Our findings question the exclusive focus of economic policymakers on the consumer price index based on a mean consumption bundle in times of diverging price developments. We advocate monitoring inflation of a broader range of real household level consumption bundles, such as inflation across the entire range of household incomes. We use the Austrian consumer survey (2009/10) as well as disaggregated price data to calculate inflation for given consumption bundles at the household level.