Lower-income households in the United States experienced the greatest impact from postpandemic inflation, but recent research indicates their wage increases were enough to improve their purchasing power by the end of 2024. The findings come from a study conducted by the Federal Reserve Bank of Cleveland.

The report shows that households in the bottom 40 percent of income distribution gained about 4.5 percentage points in cumulative purchasing power between January 2019 and 2024. This calculation considers that these households allocate more of their spending to categories like food and housing, which saw significant price increases during this period.

Households in the middle 40 percent encountered lower rates of inflation but also had smaller wage gains. As a result, they achieved a similar increase—around 4.5 percentage points—in purchasing power.

For those in the top 20 percent, purchasing power grew by about 3.5 percentage points, despite experiencing the lowest rate of inflation among all groups.

“Despite experiencing disproportionately high inflation during the postpandemic disinflation period, the bottom 40 percent have also experienced high absolute and relative wage growth,” according to the study’s authors.

The Federal Reserve Bank of Cleveland is one of twelve regional Reserve Banks forming part of the US central bank system along with the Board of Governors in Washington DC. It participates in national monetary policy decisions, supervises financial institutions, provides services to banks and government agencies, and conducts research related to economic conditions across its district—covering Ohio, parts of Pennsylvania, Kentucky, and West Virginia.

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