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A Heavy Tax On Black America: Inflation Jumps 7% Year Over Year, Used Car Prices Up 37%

A Heavy Tax On Black America: Inflation Jumps 7% Year Over Year, Used Car Prices Up 37%

Black inflation

Photo: Demonstrators asking Congress to pass President Joe Biden's "Build Back Better" agenda block Pennsylvania Avenue during rush hour outside Capitol Hill in Washington, Dec. 7, 2021. (AP Photo/Jose Luis Magana)

Inflation hit 7 percent in December, the highest in 39 years, with prices going up on almost everything. Even used cars, once the butt of “cheap” jokes, are now expensive, having seen a 37 percent spike in prices. While inflation negatively impacts most Americans, it is causing an especially heavy tax on Black Americans.

Low-income households pay higher inflation than high-income households, according to Penn State economics professor David Argente.

“Since 2004, which is the earliest point where we have some data available on, we have found that inflation inequality has increased in that low-income households have paid higher inflation than high-income households,” said David Argente, a Penn State economics professor. “This was even more pronounced during the Great Recession.”

The consumer price index rose 6.8 percent in November from 2020. This was the highest it had spiked since 1982, the Labor Department reported. That is, until December 2021.

Workers with low incomes are more likely to be Black and Hispanic, so they are also more likely to take the impact of inflation.

“When you’re low-income status, you have fewer options, fewer alternatives to get the goods and services you need,” said Andre Perry, a fellow at the Brookings Institution, according to Politico. “Black people need goods and services that are affordable.”

There are a variety of reasons why inflation hits low-income households harder. When prices go up, low-income households are limited in finding cheaper products, both because they are already purchasing the cheapest products possible and because they have less access to different stores to find sales or use coupons, according to Argente’s research.


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A wide range of products have seen price hikes. “All of the high-inflation categories, particularly energy and new and used cars, make up a larger share of the consumption basket for rural households,” a Bank of America survey found, according to Business Insider. “They also earn and save less than urban households, and so inflation is a bigger drag on their income, and they have less buffer against the shock.”

Bank of America researchers reported that African American households spent 7.1 percent of their post-tax income on energy, compared to 5.4 percent spent by other demographics. Black households spent 12.5 percent of their income on food, compared to 11.1 percent for everyone else.

Since Black and Hispanic households are significantly less wealthy than white ones, inflation widens the wealth gap.

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Photo: Demonstrators asking Congress to pass President Joe Biden’s “Build Back Better” agenda block Pennsylvania Avenue during rush hour outside Capitol Hill in Washington, Dec. 7, 2021. (AP Photo/Jose Luis Magana)