The Heterogeneous Impact of Inflation Across the Joint Distribution of Household Income and Wealth

We use the Distributional Wealth Accounts experimental statistics and preliminary survey data from the 2022 wave of the Survey on Household Income and Wealth, currently under collection, to assess the impact of the 2022 inflationary shock on financial wealth along the joint distribution of Italian household income and wealth. The analysis was carried out by dividing households into four groups based on their position relative to the median income and wealth values. In 2022 household net wealth at constant prices decreased by 11.4%, with small differences between the bottom and the top half of its distribution. The erosion of net financial wealth due to inflation amounted to slightly above one-tenth of annual disposable income for households in the upper part of the net wealth distribution. High-income households with low net wealth gained from inflation (9% of income) since they benefitted from the relatively larger erosion of the real value of their financial liabilities.