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The effect of rising energy and consumer prices on household finances, poverty and social exclusion in the EU

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Abstract

This report contains an empirical analysis based on microdata from European household surveys to provide a preliminary assessment of the potential social consequences of increasing energy and consumer prices in the EU. It uses detailed information on recent price developments and the structure of household expenditures to quantify the extent of living cost increases and purchasing power losses in a granular and customised manner across different household types and income groups in the EU. The Report is also the first attempt to calculate the potential effects of rising prices on indicators of material and social deprivation and measures of absolute poverty. It finds that, since early 2021, inflation is predicted to have increased material and social deprivation in the EU by about 2 percentage points on average, while the corresponding increase in absolute poverty may be closer to 5 percentage points. The adverse social effects of inflation are significantly larger in many Central and Eastern European Member States, especially among disadvantaged and/or vulnerable groups. This is likely to further deepen existing gaps in poverty and social exclusion between EU15 and non-EU15 countries, and calls for a strong and coordinated policy response.

Suggested Citation

  • MENYHERT Balint, 2022. "The effect of rising energy and consumer prices on household finances, poverty and social exclusion in the EU," JRC Research Reports JRC130650, Joint Research Centre.
    • Handle: RePEc:ipt:iptwpa:jrc130650
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC130650
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    Cited by:

    1. Algieri, Bernardina & Kornher, Lukas & von Braun, Joachim, 2024. "The Changing Drivers of Food Inflation – Macroeconomics, Inflation, and War," Discussion Papers 340561, University of Bonn, Center for Development Research (ZEF).
    2. Ricciutelli, Francesco, 2024. "Energy Inflation and Consumption Inequality," MPRA Paper 120899, University Library of Munich, Germany.
    3. Roberto Barrella & José Carlos Romero & Lucía Mariño, 2022. "Proposing a Novel Minimum Income Standard Approach to Energy Poverty Assessment: A European Case Study," Sustainability, MDPI, vol. 14(23), pages 1-21, November.
    4. Bardazzi, Rossella & Gastaldi, Francesca & Iafrate, Francesca & Pansini, Rosaria Vega & Pazienza, Maria Grazia & Pollastri, Corrado, 2024. "Inflation and distributional impacts: Have mitigation policies been successful for vulnerable and energy poor households?," Energy Policy, Elsevier, vol. 188(C).
    5. Pallotti, Filippo & Paz-Pardo, Gonzalo & Slacalek, Jiri & Tristani, Oreste & Violante, Giovanni L., 2023. "Who bears the costs of inflation? Euro area households and the 2021–2022 shock," Working Paper Series 2877, European Central Bank.
    6. Mohammad Fazle Rabbi & Tarek Ben Hassen & Hamid El Bilali & Dele Raheem & António Raposo, 2023. "Food Security Challenges in Europe in the Context of the Prolonged Russian–Ukrainian Conflict," Sustainability, MDPI, vol. 15(6), pages 1-20, March.
    7. Menyhért, Bálint, 2024. "Energy poverty in the European Union. The art of kaleidoscopic measurement," Energy Policy, Elsevier, vol. 190(C).

    More about this item

    Keywords

    poverty and social exclusion; inflation; household finances; material and social deprivation; energy poverty; absolute poverty;
    All these keywords.

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