Why Food Inflation Hits Poor Households Harder

For the poorest families, food eats up over half of spending. A three-percent rise in rice prices means very different things at the two ends of the income distribution.

National inflation is an average that hides inequality. Bottom-decile households allocate 56 percent of spending to food versus 22 percent at the top.

Uniform price-stabilization is therefore regressive. What is needed is a cushion calibrated to household spending composition, not just an aggregate inflation target.