Inflation has soared to rates that are higher than has been the case since the late 1970s. New research from the University of California San Diego’s School of Global Policy and Strategy finds that Black families experience slightly higher inflation and 13 percent more volatile inflation, which impacts prices on groceries and other household essentials. The study found that Black families spend a larger portion of their income on essential goods and services, like electricity and wireless phone services, compared to White households that spend more on luxury items, such as wine and pet care, which are less likely to fluctuate in price.
Author Munseob Lee, assistant professor of economics at the University of California, San Diego who holds a Ph.D. in economics from the University of Chicago, states that “Black and low-income households are more likely to live in food deserts and have limited access to affordable and nutritious food. As we saw recently, in those areas, retail products became more expensive and shelves in the retail stores became frequently empty because of increased shipping costs and supply chain disruption. This volatility makes it more difficult for households to predict and recalibrate consumption and savings.”
Black households tend to have fewer options when inflation increases. Dr. Lee found White households would shop at less expensive supermarkets and convenience stores; however, many Black households were already shopping at these markets. He added that with gas prices rising, it becomes more difficult for these families to use transportation to find essential goods.
Dr. Lee’s research has shown that during a recession, high-income households used more coupons, but this was not the case for low-income shoppers. “‘Coupon-cutting’ often requires time and Black or low-income households tend to have less leisure time because they have higher working hours and are less likely to afford childcare or assistance with household chores,” Dr. Lee said.
The study, “Do Black Households Face Higher and More Volatile Inflation?” was published by the Federal Reserve Bank of Richmond. It may be accessed here.