Real household income per capita grew by 0.6% in the OECD in the fourth quarter of 2022, exceeding growth in real GDP per capita of 0.1% (Figure 1). Despite moderate growth in the third and fourth quarter, on an annual basis 2022 real household income per capita fell by 3.8% in the OECD, the largest annual decline since the beginning of the series.
Household income results varied widely across OECD countries in Q4 2022. Of the 21 countries for which data is available, eight recorded an increase in real household income per capita, while the other 13 recorded a fall. Among G7 economies for which data is available, the United Kingdom saw the largest increase in real household income per capita in Q4 2022 (1.2%), driven by wage growth and government support for household energy consumption. Canada, France and the United States also reported increases in real household income per capita, exceeding the performance of GDP per capita, which grew by 0.5% in the United States and contracted in Canada and France (Figure 1). Conversely, real household income declined by 3.5% in Italy as spiking energy prices in Q4 2022 led to high inflation, undermining household income when measured in real terms.
In 2022 as a whole, real household income per capita fell by 3.9% in the G7 economies (Figure 2). The largest decrease was in the United States (-6.0%), where COVID-19 related government assistance paid to households in 2021 ceased. Among other OECD countries (Figure 3), Chile saw the largest decline in real household income per capita in 2022 (-15.1%), driven by the discontinuation of pandemic-related early pension withdrawals permitted in 2021.Even in economies that were not affected by the end of pandemic-related assistance programmes, increases in inflation undermined household incomes in real terms in 2022[1], despite the growth in GDP per capita.
[1] More information on the role inflation plays when measuring household economic well-being is available in this blog piece.
