The losers and winners from the recent inflation – Natixis

The high inflation in 2021-2022 in the United States, the eurozone and the United Kingdom has important redistributive effects. Economists at Natixis look at who are the winners and losers from the very high inflation.

Who benefits from inflation?

“The portion of the inflation that results from the rise in the prices of commodities and other imported goods is negative for all economic agents since the country’s income is reduced by the increase in the value of imports.”

“If nominal wages are only partially indexed to prices, inflation benefits companies and is negative for wage earners.”

“The effect on governments’ accounts depends on the price sensitivity of tax revenues on the one hand and public spending on the other. Normally, a portion of public spending is only partially indexed to prices (spending is fixed in nominal terms in advance), in which case inflation then improves public finances. But we find that in reality, inflation has no significant effect on governments’ accounts.”

“The effect on savers depends on the reaction of nominal returns on the various forms of savings to inflation.”