US Households Spend 330,000 Won More Monthly Due to Soaring Prices... Middle Class and Hispanic Communities Hit Hardest

Prices of Cars, Gasoline, Furniture, and Groceries All Rise

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Due to rapid inflation, an analysis has revealed that American households are spending an additional $276 (approximately 330,000 KRW) per month on average. In particular, when considering purchase details and proportions, it appears that the middle class and Hispanic communities have been the most affected.

The Wall Street Journal (WSJ) reported on the 10th (local time), citing an analysis by Moody's Analytics, stating that the sharp inflation not seen in 40 years is placing a heavy burden on American households. The additional expenditure was calculated by applying an inflation rate of 7.5% to U.S. household consumption data from 2018 and 2019, when the average inflation rate was 2.1%, according to Moody's Analytics.

This study is based on the premise that prices of certain goods and services have risen more than others, so people who need to purchase those goods and services would have been hit harder. For example, last year, the price of washing machines in the U.S. surged by 12.1%, meaning consumers looking to buy new products likely felt the impact of inflation more acutely than in other cases.

According to a survey by Wells Fargo, a major U.S. bank, as of December last year, the inflation rate felt by the middle class was 6.7%, which is 0.5 percentage points higher than other groups. This is due to gasoline prices, which make up a large portion of middle-class consumption, soaring nearly 50% in December last year, along with a sharp rise in used car prices. In the U.S., recently, used car prices have been increasing more rapidly than new car prices. According to U.S. Department of Labor data, only 72% of households in the top income group owned or leased vehicles in 2020, which is significantly lower compared to 90% of all households.

Additionally, high-income groups tended to spend more on dining out and leisure, where price increases were much lower than the overall inflation rate. According to U.S. Department of Labor data, this group also spent more on education, which is interpreted as being due to having more children under 18 on average compared to other income groups.

[Image source=AP Yonhap News]

By race, Hispanic or Latino households, which spend heavily on used cars and gasoline, experienced an inflation rate of 7.1%. This contrasts with Asian households, whose income is higher than the U.S. average, experiencing a relatively lower inflation rate of 5.6%. Additionally, those aged 35 to 44 saw a 6.9% increase last year, a slight rise compared to younger age groups.

However, WSJ evaluated that such calculations may not clearly reflect the financial realities of each group. Economists point out that the government's method of measuring housing costs likely overestimates the cost burden for homeowners and underestimates it for renters. Furthermore, low-income households allocate the largest portion of their income to rent, which means this group may experience even steeper inflation.

Meanwhile, the U.S. Department of Labor announced on the same day that the Consumer Price Index (CPI) for January surged 7.5% compared to the same month last year. This marks the largest increase in 40 years since February 1982.

This content was produced with the assistance of AI translation services.