Inflation, Poverty And Debt: How Rising Prices And Borrowing Costs Deepen Inequality
Economic And Financial Analysis By Zeeglobalvision | Inflation, Poverty, Inequality And Household Debt Inflation does more than increase prices. It changes who can maintain their standard of living, who must borrow, who can still save and who is pushed closer to poverty. The first stage of the damage appears in household expenses. Food, rent, energy, transportation, healthcare and education begin consuming a larger share of income. The second stage can appear when central banks raise interest rates to control inflation. Mortgages, business loans, personal loans and other forms of credit become more expensive. Households can therefore face a double financial squeeze: Their existing income purchases less. The cost of borrowing additional money increases. This pressure is not distributed equally. A higher-income household may reduce discretionary spending or save less. A lower-income household may reduce food quality, delay healthcare, withdraw a child from educational act...