Inflation Rate Variations Across Household: Empirical Evidence from Taiwan‪.‬

ABSTRACT The variability in the rates of inflation across household groups is an important public policy issue. In this empirical study using Taiwan's household expenditure data for the period 1991-1996, we found statistically significant evidence to support the claim that different household groups face differential price changes, and that these variations are persistent over time. We also found an inverse relationship between the inflation rates faced by each household group and the household income level; in particular, the poorest group faced an inflation rate that was significantly higher than the general population by 0.15 percentage point annually. In light of the results of this study, and taking into consideration the intrinsic value of the group-specific price indexes, we recommend the current welfare programs be linked to these indexes.