Latino and black population in the United States has faced higher than the national average inflation rates since prices began to rise in March 2021, according to a recent analysis by the Federal Reserve Bank, from New York. That's a shift from the pre-pandemic period, when Black and Hispanic Americans' inflation rates were at or slightly less than the national average.

According to the researchers, “While employment rates for racial and ethnic groups are tracked by the Bureau of Labor Statistics (BLS), there are no demographic-specific official measures of inflation rates. However, the BLS computes separate inflation indexes (consumer price indexes, or CPIs) for different categories of goods, such as food, clothing, energy, housing, or entertainment. The BLS also conducts a Consumer Expenditure Survey (CEX), which allows one to see how different demographic groups allocate their spending to these different categories. For example, as the 2019 CEX shows, Black Americans spend relatively more on transportation and housing and relatively less on food and entertainment than white Americans do”.

According to a CNN News, “Prices for most goods have surged in recent months due to pandemic-related supply chain constraints and the fallout from Russia's invasion of Ukraine. Inflation is rising at its fastest pace in 40 years”.

The annual inflation rate for the major categories of consumption the New York Fed looked at was 9.2% in May, somewhat higher than the 8.6% reading for the Consumer Price Index that's typically used.

“However, adjusted for spending levels, the inflation rate for Hispanic Americans was roughly 0.6 percentage points higher than the overall rate researchers constructed. For Black Americans, it was about 0.2 percentage points higher.

The rate for White Americans was very close to the overall rate the Fed constructed, while for Asian Americans, it was about 0.5 percentage points less”.

“Notably, these spreads are more than twice as large as they were in 2019, though at that time Black and Hispanic Americans experienced slightly lower inflation than the national average and Asian Americans slightly more. The current inflation disparities among different demographic groups, however, are probably even larger than the analysis found, according to the researchers. Different groups likely pay different prices for the same items, and Black and Hispanic Americans likely face higher price growth”, according to CNN.

When Covid-19 first upended the economy, Black and Hispanic Americans lost their jobs in greater numbers. This widened the employment rate gap to 6 percentage points or more for both groups, compared to the average American.

By contrast, in February 2020, the spread was 4.4 percentage points for Black Americans and 2.3 percentage points for Hispanic Americans, the analysis found.

But by May 2022, the gap for Black Americans was 3.3 percentage points, less than it was prior to the pandemic. For Hispanic Americans, the differential was 2.6 percentage points, just above its pre-pandemic spread.

According to the Fed Research, “there is a strong contrast between the widening demographic disparities in inflation and the narrowing demographic gaps in employment rates that we observed in our previous post. In many ways, the situation is the reverse of what happened during the long recovery from the Great Recession. Then, inflation remained quiescent, while employment rates remained below their pre-crisis levels for years, with less advantaged groups experiencing particularly prolonged employment slumps. Currently, employment rates, both on average and for less advantaged groups, are nearly back to their pre-COVID levels, with employment gaps for Black and Hispanic Americans close to multi-decade lows. However, inflation has risen sharply overall and especially for Black and Hispanic Americans. These facts are important to consider in pursuing a monetary policy that strives for maximum employment and price stability for all Americans. The ways in which different demographic groups experience inflation and the Fed’s response to it will be an important issue that we will continue to track”.