WASHINGTON (USA Today) - If you’re a Black or Hispanic consumer and you feel like your pain is worse during this bout of soaring inflation, you might be right, according to new research from the Federal Reserve Bank of New York.
In the 12 months to May, consumer inflation surged to a 40-year high of 8.6%, and gas prices have climbed to record highs. Consumers across the board have felt squeezed, but maybe not more so than Black and Hispanic consumers, who tend to spend more in categories that have seen some of the highest inflation rates.
“When overall inflation began rising in March 2021, inflation disparities surged, with Black and Hispanic Americans experiencing higher inflation than the national average and Asian Americans experiencing lower inflation,” the report said. “These disparities are more than twice as large as those observed during 2019.”
Since the Bureau of Labor Statistics’ consumer price index (CPI) report breaks down inflation rates only by categories, researchers used information from the government’s Consumer Expenditure Survey on what different demographics spend their money on to create a basket for each group.
Researchers then applied weighted average inflation estimates of the components of the consumption basket for each demographic group. They found Hispanics were experiencing 0.6% worse inflation than average and Blacks are experiencing 0.2% worse inflation than average.
While this provides a glimpse of the inequalities created by inflation, it likely still underestimates the disparities between groups.
“In addition to consuming different bundles of goods, different demographics likely face different prices for the same goods, with less advantaged demographics facing higher price growth,” the report said.
The highest inflation rate in 40 years hurts all consumers.
Based on 2019 data, Black consumers spend relatively more on transportation and housing and relatively less on food and entertainment than whites.
Used car inflation last year tipped 40%, though that’s come down sharply to around 16% now. And rents have surged since the government lifted its rent moratorium last year. Redfin said the median monthly rent in the U.S. surpassed $2,000 for the first time in May, rising 15.2% from a year earlier to $2,002.
Meanwhile. food inflation was 10.1% in the 12 months to May, BLS said.