Ok this might seem a bit far fetched, but lately people have been feeling more and more than the inflation reported is not the same that they feel in their day to day.
And i will start this by giving the example of my country of Portugal, in 2024 the reported inflation was around 2.42% while for example house prices were up ~10%, and i felt that since i had to renew my rent contract and had a ~20% rent increase which made me downgrade. This does not feel like 2.42% inflation, in fact housing alone made my expenses go up by way more than 2.42%, so i started learning on how inflation is calculated and in the year of 2024 the main inflation index of Portugal has the rent weight at 8%, 2025 same issue house prices are going up at around 4% per quarter but inflation at the end of this past year seems to be around 2.3% and the rent weight is still only 10%. For anyone that does not own a house inflation from housing alone is going up faster than 2.3%.
This does make sense since the average portuguese is 47 and owns a house for more than a decade so their rent/house payments are almost nothing. But since house prices have been going up so fast for the past 10 years for anyone below 40 spending only 10% on housing is basically impossible. So it seems to me that inflation is not felt the same way for everyone.
Same thing for the US from what i read, the last year of the Biden admin there were plenty of articles talking about a "Vibecession" were most economic indicators were showing that the economy was doing great but people were feeling otherwise.
And if you look at wage growth, even tho income inequality is up, wage growth for low income earners is still above inflation, but the price of necessities are going up faster than inflation which means than even tho low income earners real wage growth is up, it might not be going up as fast as their expenses on necessities.
So my questions are, is income inequality increasing pulling the average up so fast that the "median" person is actually below it and not feeling it's benefits because they experience inflation in a different way?
Is the population pyramid being so strongly weighted to house owning boomers that the spend on housing for anyone that does not own one is being vastly underrepresented on inflation data?
Or do i just have a wrong conception on how inflation is calculated and these things are actually taken into consideration by the inflation data and what people and I feel is off?
Some sources for what i wrote:
https://www.macrotrends.net/global-metrics/countries/prt/portugal/inflation-rate-cpi
https://ec.europa.eu/eurostat/databrowser/view/prc_hpi_q/default/table?lang=en
https://www.cnbc.com/2024/11/07/is-the-vibecession-here-to-stay-heres-what-experts-say.html
https://www.epi.org/publication/swa-wages-2023/
https://accidentalfire.com/2022/12/13/price-changes-over-time-some-things-have-gotten-ridiculously-cheap/
Can income inequality and the population pyramid skew the inflation data?
byu/klatez inAskEconomics
Posted by klatez