Original research article
Przegląd Europejski – European Studies Quarterly

Impact of inflation on household consumption structure. Evidence from EU cross-country panel data

2026, No. 3

Piotr Misztal

0000-0003-2609-3439

Casimir Pulaski Radom University (Radom, Poland)

DOI

10.31338/1641-2478pe.3.26.8

Publication date

24.09.2026

Submission date

29.06.2026

Acceptance date

04.08.2026

Publishing model

open access

License type

CC BY 4.0 Int.

Field

Social sciences

Discipline

political and administrative sciences, international relations, sociology, law, economics and finance, management and quality studies, social communication and media studies

Language of publication

English

Number of views:25

Number of downloads:0

Crossref citations:0

Altmetric score:0

Abstract

The study examines how inflation is associated with the structure of household consumption expenditure across income quintiles in EU countries over the period 2000–2024. Its purpose is to identify whether the budget shares of major consumption categories respond differently to inflation in the lowest (Q1) and highest (Q5) income quintiles. The analysis uses Eurostat cross-country panel data and a fixed-effects baseline specification, in which budget shares are related to headline Harmonised Index of Consumer Prices (HICP) inflation. The dependent variable is an expenditure share. Therefore, the estimated coefficients are interpreted as changes in budget composition rather than as changes in physical consumption volumes. Diagnostic tests indicate serial correlation and groupwise heteroskedasticity, motivating robust inference. The baseline estimates show heterogeneous associations: for Q1, higher headline inflation is associated with a lower food and non-alcoholic beverages budget share, and a higher housing and utilities share; for Q5, negative correlations with inflation are more visible in transport, communications and education, while housing remains positively correlated with inflation. As headline HICP can conceal different relative-price shocks across COICOP components, this limitation is explicitly addressed, and the use of category-specific HICP indices is considered as an important direction for future research. The findings should be interpreted as reduced-form evidence on budget-share reallocation, not as causal estimates causal estimates of the impact on consumption volumes or welfare levels.

Keywords:

EU countries,consumption expenditure,inflation,price sensitivity,distributional effects

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