Consumer prices in January rose 7.5% from a year earlier, the fastest annual pace in 40 years.

However, households do not feel these price shocks in the same way.

The lowest-income working households (earning less than $20,000 a year) faced the highest rate of inflation of any income group in 2021, according to an analysis by researchers at the Wharton School of the University of Pennsylvania.

These families spent more of their budget on necessities such as energy and transportation, the prices of which rose faster than other goods and services.

Meanwhile, the lowest-paid workers enjoyed the strongest wage growth last year, as restaurants and other generally lower-paid employers compete for scarce talent.

But the higher cost of living for the lowest earners was more than triple their additional annual salary – $1,837 versus $578, respectively, according to the Wharton School report released Tuesday.

According to Alexander Arnon, Zheli He and Xiaoyue Sun, co-authors of the report, this dynamic means that the lowest earners have felt a drop in their purchasing power in 2021, unless they can supplement their income with other income such as government benefits.

High earners fare better. Most households with an annual income of $20,000 to $100,000 roughly broke even, while those with more than $100,000 came out on top, according to the analysis.

For example, households with income above $150,000 saw their annual wage growth outpace that of the cost of living by about $2,000 (or $7,431 versus $5,483, respectively).

(Of course, experiences may vary within each income cohort. The analysis measures the median worker, or one in the middle of a group.)

It may seem counter-intuitive that the highest earners came out ahead if their wage growth was lower than that of the lowest earners. But their increases came on top of higher starting incomes, representing more dollar money than the lowest incomes. Additionally, well-paid workers were more likely to stay employed year-round and work full-time, the study found.

Additionally, more than 90% of households with incomes below $20,000 spent more than they earned from working in 2021, according to the research, meaning many may have had to borrow or spend savings to finance their way of life.

And research suggests that low-income people, who have seen their savings increase during the pandemic, may soon exhaust that reserve of cash.

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Savings for the lowest-income families were still 65% above pre-pandemic levels at the end of 2021, according to a JPMorgan Chase Institute analysis released Wednesday. (These households represent the bottom quarter of earners, with net income below about $26,000.)

Their accounts have been mainly buoyed by government benefits such as stimulus checks, monthly child tax credit payments since July and improved unemployment benefits.

But their balances were 120% higher in March 2021 compared to two years earlier – suggesting a decline in savings, the analysis found.

“They are still high, but clearly on a downward trend for low-income families,” according to Fiona Greig, co-chair of the Institute and co-author of the study. “This implies that the pace of their income does not quite keep up with the pace of their expenditure,” she added.

Additionally, their savings amounted to just under $1,300 at the end of 2021, which is “not a huge amount of cash on hand. [that will] fuel expenses for months and months and months,” Greig said.

The expiry of federal aid could weigh even more on their accounts. Monthly child tax credit payments expired at the end of 2021, and federal student loan payments are expected to resume in May, for example.

Conversely, savings have been relatively flat for top earners (with more than $65,000 in income) during the pandemic, according to JPMorgan. Their balances remain around 30% to 35% from 2019 levels, or nearly $7,000 in total.

People with higher incomes were less likely to qualify for certain government supports; their high savings were largely due to reduced spending during the pandemic, on things like travel and entertainment.