The Federal Reserve Bank of Cleveland published research on how postpandemic inflation and wage growth varied by income group, finding that lower-income households experienced the highest inflation but saw wage gains that more than offset those price increases by the end of 2024. Households in the bottom 40 percent of the income distribution gained roughly 4.5 percentage points of cumulative purchasing power from January 2019 through 2024, after accounting for their higher spending share on items with larger price increases such as food and housing. The middle 40 percent also gained about 4.5 percentage points, reflecting lower inflation but lower wage gains. The top 20 percent gained about 3.5 percentage points of purchasing power, despite facing the lowest inflation rate of the three groups.
Federal Reserve Bank of Cleveland 2025-06-10
Federal Reserve Bank of Cleveland research finds lower-income households faced higher inflation but gained 4.5 percentage points of purchasing power through 2024
Research from the Federal Reserve Bank of Cleveland shows postpandemic inflation and wage growth varied by income group. Lower-income households faced the highest inflation but achieved wage gains offsetting price increases by the end of 2024. Households in the bottom and middle 40 percent of the income distribution gained about 4.5 percentage points in purchasing power, while the top 20 percent gained about 3.5 percentage points.