Inflation Variability Across Australian Households: Implications for Inequality and Indexation Policy

We examine the consumer price inflation experiences of Australian households across the income distribution using Australian Bureau of Statistics data and prices and methodology from the national consumer price index. Across the period 2011-18, we find that the lowest-income households have experienced the largest inflation and those at the top have experienced the least inflation. These differences in inflation experience are completely driven by alcohol and tobacco. When we remove alcohol and tobacco, we find that there is little variation in the inflation experiences of households across the income distribution.