Relative price shocks and inequality: evidence from Italy

Leonardo Ciambezi () and Alessandro Pietropaoli ()
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Leonardo Ciambezi: CNRS GREDEG, Université Côte d'Azur, Nice; Institute of Economics and l'Embeds, Scuola Superiore Sant'Anna, Pisa
Alessandro Pietropaoli: Bank of Italy; CNRS GREDEG, Université Côte d'Azur, Nice

No 883, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Is inflation equal for all? Combining Italian Household Budget Survey (HBS) and Harmonised Index of Consumer Prices (HICP) data, we investigate the heterogeneity of Italian households' inflation experiences over the period 2015-23, depending on their standards of living and other observable characteristics. Following several years of distributional inflation neutrality, we find that the price surge that began in mid-2021 especially increased the cost of living for poorer households and more vulnerable socio-demographic groups, thus contributing to increasing overall inequality. After peaking in the second half of 2022, the aggregate inflation rate declined sharply in 2023, as did the differential exposure of Italian households.

Keywords: household-specific price indices; energy price shocks; inflation inequality; Italy (search for similar items in EconPapers)
JEL-codes: D31 E31 (search for similar items in EconPapers)
Date: 2024-10
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