Schulz, JanJanSchulz0000-0001-7745-3997Ipsen, LeonhardLeonhardIpsen0009-0007-7419-88722025-06-232025-06-232025https://fis.uni-bamberg.de/handle/uniba/108327We argue that most of the existing literature on inflation inequality misses an essential source of disparity by focusing on differences in expenditures while ignoring the effect of a price change on the purchasing power of households’ incomes. As a remedy, we propose weighting price changes by income rather than by expenditure, as is commonly done. We theoretically derive why, under incomeweighting, lower-income households are disproportionately affected by any change in prices. This proposition is validated empirically for 21 EU countries using current sector-level input-output data. Our approach allows to reconcile the conflicting evidence in the literature on inflation inequality regarding structurally higher inflation perceptions and expectations of lower-income households. Ultimately, these findings call for a broad reassessment of current approaches to measuring inflation and income inequality.engInflationInequalityInput-output AnalysisEurope330workingpaperurn:nbn:de:bvb:473-irb-108327x