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Inflation at the Household Level

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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.

Suggested Citation

  • Greg Kaplan & Sam Schulhofer-Wohl, 2017. "Inflation at the Household Level," Working Paper Series WP-2017-13, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-2017-13
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    More about this item

    Keywords

    Inflation; heterogeneity; households; low income;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D30 - Microeconomics - - Distribution - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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