Real household income across OECD declines for third straight quarter as price squeeze intensifies

Real household income across industrialised nations fell for a third straight quarter between April and June this year as higher energy and food costs squeezed domestic budgets, according to the Organisation for Economic Co-operation and Development (OECD).

The OECD’s figures indicate that real household income per capita in the 38-member bloc declined by 0.5 per cent in the second quarter of 2022, contrasting with growth of 0.3 per cent in real GDP (gross domestic product) per capita.

“This is the third quarter in a row that real household income per capita has declined in the OECD, as rising consumer prices continue to undermine growth in household income when measured in real terms,” the Paris-based organisation said.

The sharpest declines were in France (-1.2 per cent) followed by Canada and the UK (-1.1 per cent) and the US (-0.4 per cent).

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The OECD noted that the decline was the fourth consecutive quarter of falling real income for households in the UK and the fifth consecutive quarter for households in the US.

“The declines over this longer period reflect both the reduction in pandemic-related government assistance and rising consumer prices faced by households,” it said.

The growth profiles of the two indicators over time are very different, the OECD said, with real GDP per capita climbing since its trough in the second quarter of 2020, at the height of the pandemic, while real household income per capita has trended downwards since the first quarter of 2021.

“The decline in real household income per capita during this period has been driven by falls in the United States, the United Kingdom and Canada,” it said.