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> It's important to remember that inflation hurts the poor most. Is this actually true? Do you have any articles that could describe this effect in more detail
by helen___keller 5y ago
> It's important to remember that inflation hurts the poor most.
Is this actually true? Do you have any articles that could describe this effect in more detail?
As I understand it, inflation by itself doesn't seem sufficient to describe people's bottom lines - in theory, if wages, prices, and stocks all go up by 10% in one year then 10% inflation has been neutral to the poor, neutral to holders assets correlated with the stock market, positive to fixed-rate debt holders, and negative to fixed-rate asset holders (like the lenders for that debt).
Right now we're seeing a major crunch for labor on the low end, like fast food joints offering higher wages than ever with bonuses even for just interviewing in some cases. So it doesn't seem to me that the poor are necessarily being hurt, at least not yet.
- bko 5y agoWorld Bank: > High inflation tends to lower the share of the bottom quintile and the real minimum wage -and tends to increase povertyL Just look at what its like to be poor in a high inflation country. https://openknowledge.worldbank.org/bitstream/handle/10986/18842/multi_page.pdf?sequence=1&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/1...
- helen___keller 5y agoThanks for sharing! Another commenter mentioned that labor shortages on the low end might be related to stimulus payments and pandemic unemployment payments - if so then I suppose what we'd expect is that if inflation remains high over the next year as we go without stimulus and pandemic unemployment payments, any labor shortages (and corresponding boost in wages) will quickly end, and we will proceed to observe the cited effect - that the remaining inflation hits the poor the hardest.
- bart_spoon 5y agoIt's important to note that that's "high" inflation, not inflation period. Low inflation also has a negative impact on the poor, while benefiting the wealthy, and for many years at this point inflation has been considered quite low. It is likely a major factor on the increase in inequality seen over the same time frame.
- 3np 5y agoThe more you have, the more likely are you to invest, and invest it better. Those with <= 1y income in the bank (most people) are more likely to just hold cash above what goes into their retirement fund.
- AnimalMuppet 5y agoOne reason it hurts the poor most is because of timing. Prices go up 10% over the course of the year. Then, after prices have gone up, then wages go up to make up for what prices have already done. But that leaves you with a chunk of time when prices have risen but your wages have not. If you're already poor, that really hurts.