Wells Fargo answers: Who is inflation still weighing on the most?

Rising Inflation and Its Impact on Consumers

Overview
Wells Fargo analysts highlighted that inflation is exceeding the Federal Reserve’s target, presenting challenges for consumers. Analysis shows inflation affects various demographic groups differently.

Income Impact

Wells Fargo identifies lower-income households as the most impacted by inflation, enduring the strongest price increases recently. Essential costs like housing, electricity, and food are primary drivers of this inflation. The bank notes that lower-income consumers, spending a larger portion on necessities, feel the inflation's burden more heavily.

Race and Ethnicity

According to Wells Fargo, Asian households have faced the highest inflation rates over the past year, though their cumulative living costs have risen less sharply. Conversely, Hispanic and Latino households have experienced the lowest recent inflation but have endured steep inflation rates alongside Black households over the past four years.

Age Dynamics

Seniors are notably affected by rising healthcare costs and have experienced the highest inflation rates in the past year. In contrast, Gen-X households have faced less severe inflation, as they tend to spend more on goods with lower price increases.

The report concludes that while the lowest-income households saw significant gains in inflation-adjusted incomes in the early pandemic years, these gains have eroded due to weaker nominal income growth and ongoing high inflation rates compared to wealthier households.