Working Paper Series Inflation heterogeneity across Austrian households. Evidence from household scanner data Teresa Messner, Fabio Rumler Disclaimer: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. No 2894 Price-setting Microdata Analysis Network (PRISMA)This paper contains research conducted within the Price-setting Microdata Analysis Network (PRISMA). PRISMA consists of economistsfrom the ECB and the national central banks (NCBs) of the European System of Central Banks (ESCB). PRISMA is coordinated by a team chaired by Luca Dedola (ECB), and consisting of Chiara Osbat (ECB), Peter Karadi (ECB) and Georg Strasser (ECB). Fernando Alvarez (University of Chicago), Yuriy Gorodnichenko (University of California Berkeley), Raphael Schoenle (Federal Reserve Bank of Cleveland and Brandeis University) and Michael Weber (University of Chicago) act as external consultants. PRISMA collects and studies various kinds of price microdata, including data underlying official price indices such as the Consumer Price Index (CPI) and the Producer Price Index (PPI), scanner data and online prices to deepen the understanding of price-setting behaviour and inflation dynamics in the euro area and EU, with a view to gaining new insights into a key aspect of monetary policy transmission (for further information see https://www.ecb.europa.eu/pub/economic-research/research-networks/html/researcher_prisma.en.html) The refereeing process of this paper has been co-ordinated by a team composed of Luca Dedola (ECB), Anton Nakov (ECB), Chiara Osbat (ECB), Elvira Prades (Banco d’Espana), Sergio Santoro (ECB), Henning Weber (Bundesbank). This paper is released in order to make the results of PRISMA research generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the author’s own and do not necessarily reflect those of the ESCB. ECB Working Paper Series No 28941AbstractIt has been widely documented that households experience different inflation rates whichare generally concealed in aggregate price indices. Using scanner data from a large householdpanel for Austria, we analyse price dynamics faced by individual households and try to explainthe causes for the observed inflation differences. Considering not only consumption sharesbut also the specific product prices paid by households, we find a considerable and persistentdegree of heterogeneity among household inflation rates. These are also quite variable overtime, resulting from varying consumption baskets and active product substitution, allowinghouseholds to reduce their inflation exposure substantially. Factors like age and shoppingbehavior of households explain some of the inflation differences, whereas income does notseem t...
