Rising oil prices are hard to ignore, study: Inflation hits middle class hardest

Our generation is experiencing the most significant inflation, according to Moody’s analysis, in the United States with more inflation, this wave of price hikes will cost everyone an extra $300 per month, but not everyone feels the same A study found that middle-class Americans are more vulnerable to inflation than lower- or upper-middle-class Americans, possibly due to skyrocketing prices for gasoline and cars, one study found.

Middle-income consumers faced the most significant increase in the cost of living over the past year, according to Wells Fargo’s inflation rate by income, with group inflation rising 6.7%, 0.5% higher than households on the upper and lower end of the income spectrum, because Just the higher shipping costs. The study pointed out that gasoline and used cars were the main drivers of inflation in the past year, and middle-income households accounted for a higher proportion of the budget than other groups.

U.S. natural gas prices have risen 38 percent since last year, according to the Consumer Price Index. Since the poor are less likely to own a car, gasoline doesn’t directly affect them, as for the very wealthy who may drive like the middle class, but spend only a fraction of their total income on things like gasoline.

The study points out that people in the upper third of the income distribution may spend twice as much on gasoline, which may be a lower share of income, but it is a larger share of income for middle-class Americans and a higher share for lower-class Americans. For classy Americans, it probably doesn’t count at all.

Rising car prices are also a factor, with prices for both new and used cars rising over the past year, but high-income earners typically buy new cars, which are up 14 percent from last year. Middle-income consumers were more likely to buy a used car, and used car prices rose 28 percent. People in the lower income bracket are the least likely to buy a car.

Households in the bottom quintile spend more on basics like groceries, rent and utilities. Higher-income households spend more heavily in areas such as education, entertainment and dining out, where prices have not risen as much as overall inflation.

In an era of skyrocketing prices, you can switch to alternatives to save money, but the only thing you can’t replace is gasoline. A recent U.S. survey found that 90 percent of consumers said they would pay more for gasoline. “It’s kind of hard to ignore when you see the price going up when you refuel,” said one respondent.

While the middle class is the hardest hit and feels the highest inflation, the middle class has room to save on other expenses to balance expenses, and rising prices would be a disaster for poorer households as income spending focuses too much on basic products , there is little room for abandonment or alternatives.

As higher prices erode the purchasing power of consumers, the natural result will be a decline in actual consumption, but economists believe that the macro-level impact should be quite small, because US household consumption is mainly concentrated in high-income groups, and the top 20% of households account for The total personal expenditure in the United States is nearly 60%, so the reduction of spending by other groups will not have much impact on the US economy and will not inhibit the growth of total US consumption. Yet for most households, while the post-pandemic economic recovery has been faster than expected, the pace of rising inflation has wiped out any sense of prosperity.

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