Neus Dausà i Noguera
- 12 November 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 7, 2025Details
- Abstract
- This article uses data from the Consumer Expectations Survey to examine the inflation episode of 2021-23, the mortgage rate responses and the perceived and actual effects of these developments on inequality. Public perceptions of inequality rose sharply during the inflation surge, with 73% of households reporting an increase. Cost-of-living pressures were cited as the main driver. By contrast, standard measures of income, wealth and consumption inequality calculated using data from the survey remained broadly stable in the euro area between 2022 and 2025. To better understand this divergence, personal inflation rates are constructed from consumption data to identify which income groups faced the greatest challenges in maintaining their living standards. Differences in financial decisions in response to higher interest rates, particularly the timing of loan applications and mortgage fixation periods, are also considered. Together, these mechanisms help to explain why inequality was perceived to have risen even though standard measures remained stable.
- JEL Code
- D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G51 : Financial Economics