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Here's why poorer families were hardest hit by post-Celtic Tiger inflation

Inflation for low income households was above the average rate during the recession.

Image: Shutterstock/ChameleonsEye

Updated at 8am

INFLATION FOR LOW income families was higher than average during the recession, while it was lower for high income families.

That’s according to research published by the ESRI.

The study found that during the years 2003 to 2008 inflation for low income households was below the average inflation rate, and inflation for high income households was above average.

However, this pattern was reversed in the recession (2009-2014), with faster inflation for the lowest income groups and slower than average inflation for those on the highest incomes.

A major factor was the difference in the inflation rate for renters and for those with mortgages; low income groups were more likely to rent, while high income groups were more likely to have a mortgage.

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Brian Colgan, a co-author of the paper, The Distributional Impact of Inflation: 2003-2014, said:

While the inflation differentials across income groups have been modest compared with those in the UK, regular monitoring of differences in inflation rates across different income groups should be considered.

It should also be noted that the rates of inflation for low and high income households can differ from inflation as measured by the Consumer Price Index, which is based on a basket of goods averaged over all households.

This is because low and high income households purchase different baskets of goods and services.

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