Inflation Tends to Impact Black Households the Most, Study Finds

Black families "suffer the most" when inflation is spiking in the U.S., according to a Monday press release from the University of California San Diego about new research on the racial disparities tied to rising costs.

Black households "experienced slightly higher and significantly more volatile inflation in consumer goods" when compared with the impacts white households experienced, according to a study published Monday by the Federal Reserve Bank of Richmond in Virginia. A majority of that inflation volatility is attributable to how Black households "are disproportionately more likely to consume goods with volatile prices," researchers wrote.

The study is the first to share findings about how the impacts of inflation differ by race, the university's news release said.

The study's assessment comes as the U.S. struggles with its biggest inflation surge in more than 40 years. Americans across the country are paying higher prices for food, gas and other consumer goods, and banking experts have warned there could be even higher inflation on the horizon.

Munseob Lee, an assistant economics professor at UC San Diego's School of Global Policy and Strategy, authored the paper. Lee assessed data from an estimated 60,000 households that shared information on purchases over time, consumer data that the release said was gathered by Nielson and covered the years from 2004 to 2020. Race was self-reported by the households assessed for the study, with most—about 82.2 percent—identifying as white and about 10 percent identifying as Black, the paper said.

Lee wrote that data showed higher inflation rates among Black households around the time of the Great Recession. The pattern continued through 2020, though to a "narrowed" degree after 2014, the study said.

While quarterly inflation rates showed a "quantitatively small" difference between Black and white households—Lee said there was an average of about 0.82 percent from 2004 to 2020 for Black households, compared with 0.81 percent during the same time period for white households—the difference in inflation volatility was much greater, with Black households encountering "13.5 percent higher inflation volatility."

Black households "spend a larger portion of their income on essential goods and services, like electricity and wireless phone services, compared to white households that spend more on luxury items, such as wine and pet care, which are less likely to fluctuate in price," the release said.

The study noted inflation volatility makes it "more difficult" for impacted consumers to "predict and recalibrate their consumption and savings."

In the study's conclusion, Lee acknowledged the high inflation rates the U.S. is currently facing and said more data collection on racial disparities in inflation is needed.

Data focused just on income "may be an incomplete measure to determine if households are eligible for government assistance, such as food stamps," Lee said in the release. "With inflation at its highest level in decades, the poorest communities are bearing the brunt of rising costs."

The Federal Reserve Bank of Richmond directed Newsweek toward the paper it published on Monday when reached for comment.