by Tao Chen, Peter Levell, and Martin O’Connell
CEPR
Inflation rates soared over the period 2021-2023, driving down households’ real incomes in the UK and other countries. This column uses detailed data on price and spending patterns for groceries to assess the relative impacts of inflation across rich and poor households. Significant differences in grocery price inflation experienced by rich and poor households only emerge once the most disaggregated product definitions are used. Price increases were disproportionately large for individual varieties of products that were initially cheaper (‘cheapflation’), driving up inflation rates for worse-off households.