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OECD: high inflation drives down real household income

For the fourth consecutive time, GDP per capita has exceeded household income per capita, reducing the gap observed at the start of the pandemic.

Real per capita household income fell by 1.1% in the OECD area in the first quarter of 2022, contrasting with the 0.2% growth in real GDP per capita (Chart 1). For the fourth consecutive time, GDP per capita exceeded household income per capita, reducing the gap observed at the start of the pandemic (Graph 2). Real household income is now 2.9% higher than it was in the fourth quarter of 2019, while real GDP is 1.6% higher.

The fall in real household income per capita in Q1 2022 is partly due to increases in consumer prices, which have undermined household income in real terms. Among the G7 economies, the impact of inflation on households in Q1 2022 was particularly visible in France, where real household income per capita fell by 1.9% and in Germany, where it fell by 1.7%. Elsewhere in Europe, the high inflation that affected households also contributed to the sharp falls in real household income per capita in Austria (minus 5.5%) and Spain (minus 4.1%).

Among the G7 countries, Canada recorded the strongest growth in real household income per capita in Q1 2022 (up 1.5%). This is mainly explained by the growth of ‘compensation of employees’ (gross wages and salaries of employees and employers’ social security contributions), which increased by 3.8% in nominal terms in Q1 2022.

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