Low- and middle-income earners stand to take the brunt of inflation—here's what that really means

As of December, prices across all goods and services had risen more in a single year than they had in nearly 40 years. The impact of that 7% increase stands to hurt already-vulnerable Americans the hardest.

While the average personal savings rate peaked during the pandemic, the lowest earners depleted those savings more quickly. Low-income households still had 70% more in their bank accounts in September 2021 than they did before the first round of pandemic-related stimulus payments, but that amounted to only a $1,000 surplus, according to data from JPMorgan Chase Institute.

The lowest-earning households, those in the bottom 20%, spend about 190% of their after-tax income each year, according to the BLS. This group receives more in public assistance, income tax refunds and pandemic stimulus money, according to the data, but those sources are included in the income calculations. Those earning about $24,000 to $45,000, more likely to be defined as the working poor, spend 110% of their after-tax income each year.

“An extra $30 a month on groceries, due to inflation, would be two days’ worth of meals for a family that spends $500 a month on food.” What this looks like in practice: A family that spends $500 per month on groceries, for example, would spend $530 after a 6% increase. At $500 per month, daily meal costs work out to about $17. The additional $30, due to inflation, would be two days’ worth of meals.

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