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High inflation bites real household income, says OECD

Real household income per capita down by 1.1% in OECD area in 1st quarter

Real household income per capita diminished by 1.1% in the OECD area in the first quarter of 2022, contrasting with a growth of 0.2% in real GDP per capita, according to data by OECD on Thursday.

“This is the fourth quarter in a row that GDP per capita has outpaced household income per capita, reducing the gap observed at the onset of the pandemic,”the Organization for Economic Cooperation and Development (OECD) underlined.

The main reason behind the decline was an increase in consumer prices, which undermined household income in real terms.

Among the G7 economies, the impact of inflation on households was specifically obvious in France, where real household income per capita went down by 1.9% and Germany, where it fell by 1.7%.

Elsewhere in Europe, high household inflation also contributed to large falls in real household income per capita in Austria (minus 5.5%) and Spain (minus 4.1%).

On the other hand, Canada posted the highest growth in real household income per capita in Q1 2022 (up by 1.5%), resulting from growth in “compensation of employees,” which increased by 3.8% in nominal terms in Q1 2022.

Source
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