New Report Describes Impact of Inflation on Rural Households

July 11, 2022, 9:01 am | David Peters

Man looks in his wallet as he  pumps gas into his vehicle by Dmitriy/, Iowa – Inflation is a bigger problem for rural households than for those living in cities, according to a new report from the Iowa Small Towns Project at Iowa State University.

Impact of Inflation on Rural Household Expenses, 2021-2022” (Rural Sociology Bulletin STR 1063) provides preliminary estimates of how inflation has affected rural and urban households. The estimates are based on data from the U.S. Bureau of Labor Statistics, said report author David Peters, an extension rural sociologist and professor of rural policy and rural sociology at Iowa State.

Inflation – the increase in prices for goods and services – has been low in the U.S. for the past several decades. However, from May 2021 through May 2022 consumer prices rose by 8.6%, catching many people off-guard.

The report distinguishes rural households as those living in non-metro areas in towns with under 2,500 population or the open countryside. Urban households are those living in a metropolitan area or those living in non-metropolitan areas in cities of 2,500 or more.

“Expenses grew faster in rural places, especially for gas and diesel, which now costs rural families an extra $900 this year. Also, rural incomes grew slower, which means wage gains are not enough to offset price increases,” Peters said.

“This combination cut rural disposable incomes by 33% from this time last year. Loss of this extra cushion makes rural Americans more vulnerable to getting into debt from unexpected expenses, like medical costs, car repairs or even a temporary reduction in hours at their job,” Peters noted.

Three factors seem to be the main contributors to the current level of inflation, Peters explained:

  • Strong pent-up demand due to the COVID-19 pandemic; now households are making these delayed purchases and bidding up prices.
  • Scarcity of goods caused by strong demand, but also a lack of consumer products from continued supply chain disruptions.
  • Increased demand for housing and services.

Additional contributing factors include uncertainty in markets due to the war in Ukraine, as well as the inflationary impact of pandemic relief payments by the federal government.

The report is available for free download from the Iowa Small Towns Project. Peters reiterated that the report’s findings are preliminary estimates and in 2023 the federal government will provide final numbers regarding the impact of inflation.

The Iowa Small Towns Project is an integrated research and extension effort to better understand the conditions and issues facing small Midwestern communities in the 21st century. Since 1994 the project has been collecting and using data from small towns to examine aspects of community life and gain insights into the changes occurring in small towns across Iowa and the Midwest.

The project has been supported by grants from USDA’s Agriculture and Food Research Initiative (Agriculture Economics and Rural Communities program). Continuing support is provided by Iowa State University’s College of Agriculture and Life Sciences, ISU Extension and Outreach, and ISU Department of Sociology.

Photo credit: Dmitriy/

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