Inflation Differentials Among Czech Households

CERGE-EI Working Paper Series No. 508

25 Pages Posted: 1 Mar 2014

See all articles by Pavel Hait

Pavel Hait

Charles University in Prague

Petr Jansky

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies

Date Written: February 1, 2014

Abstract

Inflation rates have traditionally been measured by the annualized percentage change in the price level of a market basket of consumer goods and services purchased by households. The market basket represents the spending patterns of average household. However, households differ in their spending patterns and there are differences in the price changes of various goods and services. Therefore, different households experience different inflation rates. This paper finds that these differences have been significant in the Czech Republic during the period 1995-2010. Only around 60 % of households actually experienced an inflation rate that was similar to the national average. Furthermore, the higher the average inflation rate over time, the lower the percentage of households whose inflation rate was similar to that average. The main determiners of inflation were expenditures for housing and energy and, especially for low-income households and pensioners, expenditures on food and non-alcoholic drinks. In most years, pensioners and low-income households faced significantly higher inflation rates than the average rate for the whole population.

Keywords: households, inflation, inflation differentials, relative prices

JEL Classification: D12, H22, I31

Suggested Citation

Hait, Pavel and Jansky, Petr, Inflation Differentials Among Czech Households (February 1, 2014). CERGE-EI Working Paper Series No. 508, Available at SSRN: https://ssrn.com/abstract=2402448 or http://dx.doi.org/10.2139/ssrn.2402448

Pavel Hait

Charles University in Prague ( email )

Celetná 13
Praha 1, 116 36
Czech Republic

Petr Jansky (Contact Author)

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies ( email )

Opletalova St. 26
Prague, 11000
Czech Republic

HOME PAGE: http://ies.fsv.cuni.cz/en/staff/jansky

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