Spending Shares by Income Quintile
Consumer Expenditure Survey: spending share by income quintile
| Category | Bottom 20% | Middle 40% | Top 20% |
|---|---|---|---|
| Housing | 41% | 34% | 24% |
| Food at home | 14% | 10% | 7% |
| Transportation | 16% | 17% | 14% |
| Healthcare | 8% | 7% | 5% |
| Entertainment | 3% | 5% | 8% |
| Education | 2% | 3% | 4% |
Why Low-Income Households Face Higher 'Personal Inflation'
Lower-income households spend proportionally more on food, housing, and energy — the categories that inflated most severely in 2021–2023. Higher-income households spend more on services, technology, and recreation — categories with lower inflation. The effective inflation rate for the bottom income quintile during 2021–2023 was estimated 1–2 percentage points above headline CPI.
At 9% headline CPI in 2022, a household spending 45% on housing and food at a combined 12% inflation rate faced an effective rate of approximately 10.8% on that portion of spending. At 40% income spending on essentials, the entire wage gain was consumed by inflation on necessities alone — leaving nothing to cover other rising costs.
How Low-Income Households Can Respond
Practical responses: (1) Maximize EITC and other refundable tax credits — these effectively offset some purchasing power loss; (2) Apply for SNAP benefit increases (SNAP adjusts for food inflation); (3) Negotiate utility assistance programs during high-energy-cost periods; (4) Move emergency fund to HYSA — even $2,000 earning 5% earns $100/year more than traditional savings; (5) Pursue certifications or skills increases that unlock higher wage tiers.
See How Inflation Affects Your Specific Budget
Calculate purchasing power changes relevant to your income and spending categories.