Energy price shocks broaden inflation inequality, measured by the gap between consumer prices for households at the bottom and top of the expenditure distribution, due to different consumption baskets. This study provides a VAR-based quantification of the impact of energy shocks on inflation inequality.

It then develops and estimates a two-agent general equilibrium model with imported energy to rationalise the empirical results and show why this effect becomes stronger when monetary policy responds aggressively to inflation.

Indeed, although less affluent consumers benefit from the inflation restraint resulting from monetary policy action, they do so to a lesser extent than more affluent consumers, given the relatively lower share of consumption spent on items whose prices are sensitive to cyclical conditions.

The results highlight the need to complement the monetary policy response with targeted fiscal measures.

Data: 14 marzo 2024 - 12.00 – 13.30

Autori ed istituzioni: 

Francesco Corsello, Banca d’Italia – Marianna Riggi, Banca d’Italia