Low-income households are particularly affected by inflation and therefore need more help, it said. According to calculations by Momentum, a household in the bottom fifth of income will be supported with a total of 454 euros per capita in 2023. For a household in the top fifth of income, on the other hand, it is 749 euros.
Not only are low-income households particularly affected by inflation, but a general increase in demand is also a driver of inflation. If the Momentum experts have their way, it would be more important to finance the necessary help for poorer households with higher incomes from the wealthy, corporations and top earners.
“Worse than the infamous watering can”
While the planned electricity price brake will relieve all households to about the same extent, the abolition of cold progression will bring significantly more to upper income earners. According to Momentum calculations, a household in the lowest income fifth saves about 80 euros per capita, while a household in the richest income fifth saves almost 440 euros. From a distribution policy point of view, the abolition of cold progression is “worse than the notorious watering can,” says Momentum chief economist Oliver Picek.
For low-income households, the three measures do not compensate for inflation, and according to Picek, the one-off payments will fizzle out this year: “That’s why substantial wage and pension increases are all the more important in order to be able to absorb the additional costs for households caused by inflation.” The economist can also gain a lot from a gas price brake based on the German model.
Source: Nachrichten
