The Inequality of Inflation

How inflation impacts people living on low incomes 

[NOTE: This is the first of a four-part series in The Biscuit cultivated by local nonprofit, Common Wealth Charlotte, for April’s financial literacy month.]

It’s no secret. For the last two years, Americans have been faced with multiple interlocking and compounding crises. COVID-19 might have been the scariest, but it was far from the only threat.

The latest economic hurdle  is inflation. 

“The people who are hardest hit are those whose self-reported income is in the lowest income bracket,” said Tonia Frazier, certified financial social worker at Common Wealth Charlotte.

One definition of inflation is the progressive increase in prices of goods and services in an economy. Inflation has been a major disruption to the economy, but how and why does it affect the most economically vulnerable populations? 

In short, people who were already living on a low income – including many members of Charlotte’s creative economy – are now spending a larger portion of their living expenses on necessities whose costs have increased exponentially.

Making Ends Meet
Wait … WHAT?

Inflation disproportionately affects people living on a low income. With increased insecurity, many live experiences that sound something like:“I was laid off for a time during COVID, came back to work and still can barely maintain all of my bills.” 

In addition, rent never decreases, but instead can increase on an annual basis as much as $300 per month.

“That amount may not seem like a lot,” adds Frazier, “but for a person barely living paycheck to paycheck, the perpetual question is ‘Where will the money come from?’”

Falling Through Holes in the Safety Net

Without a safety net, many cannot afford to stay in place nor move to a less expensive place. Many benefits put in place or increased during the pandemic (such as SNAP – Supplemental Nutrition Assistance Program) have expired. 

With fewer margins of adjustment to absorb it, people are forced to make difficult decisions at the grocery store. Many spend more than 40% of their income on rent. Surging gas prices are of concern. 

“Parents fight traffic getting to and from work, pick up the children from daycare or school and then figure out how to feed their family,” said Frazier. “Add an unexpected medical bill, and making ends meet takes on a new meaning.” Some unable to supplement their income may be forced to choose between paying daily living expenses and buying medication.

Financial Stress

The COVID pandemic and inflation have had an even greater impact on individuals’ financial stability. People with low incomes may experience financial stress across many other aspects of their lives.

“Not having enough money to pay for essentials can cause physical, mental and emotional difficulties – for example, anxiety, depression, increased suicidal thoughts, hopelessness, high blood pressure, poor eating habits,” Frazier continued. “Many people have fewer tangible and psychosocial resources to cope with everyday stressors, which includes health insurance, emergency funds, reliable transportation and a social support network.”

Across these domains, individuals experience an increase in doctor and emergency room visits, absences from work and poor work performance.

Rethink and Reframe

For the past two or more years, we have experienced what can be considered psychological earthquakes. One may ask:  What good can come of this? 

History teaches us that negative experiences can inspire positive change. 

Need proof? At the height of the pandemic, homes turned into school classrooms, workout studios, test kitchens for home-cooked meals, home offices, and some people started their own businesses.

“We were essentially forced to explore new possibilities, unearth personal strengths, and gain a greater appreciation for life,” said Frazier. 

“This is referred to as post-traumatic growth (PTG) – a phenomenon that says adversity helps to create a deeper sense of value, so we begin to see what really  mattered all along.”

What is Common Wealth Charlotte?

Common Wealth Charlotte seeks to be a catalyst for improving lives by replacing uncertainty and reliance on charitable and government assistance with financial capability, equipping Charlotte’s economically-vulnerable population with trauma-informed  education, certified financial counseling, asset- and wealth-building skills and access to banking services and 0% interest loans.

For information on Common Wealth Charlotte’s educational offerings and financial services, visit