Thursday, January 15, 2015

We are going to run out of middle class

The results show the variation of inflation on income groups.  It is for the UK, but the results are likely similar for the USA.  Where does the money come from to make middle class inflation higher than upper class inflation? It doesn't, this is not monetary inflation, this is wealth transfer.

UK: The results of our analysis suggest that the price experience of different types of UK household has varied widely between 2003 and 2014. The largest differences are between households at the top and bottom of the expenditure distribution. Households that spend relatively little each month have experienced faster price growth than households who spend more. On our preferred measure, among the lowest-spending households experienced average annual inflation of 3.3% between 2003 and 2013, compared with 2.3% for among the highest spending households. These differences compound over this period, and consequently the prices of products purchased by the former group have risen by 45.5%, compared with just 31.2% for the latter.

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