As the national conversation begins to revolve increasingly around the risks of rising inflation, millennials and baby boomers find themselves on opposite sides of another generational divide.

Inflation has been a rising concern for consumers and policymakers alike. In July, U.S. government data showed wholesale inflation rose for the sixth consecutive month to 7.8%. The Producer Price Index (PPI) rose 1%, outpacing Wall Street expectations of 0.6%. The Labor Department found consumer prices had gone up by 5.4%, the fastest increase since August 2008.

According to a recent Bankrate.com survey, 95% of boomers reported that they experienced higher prices and three-quarters of those surveyed said that it negatively impacted their financial situation. At the same time, 84% of millennials and 75% of those in Gen-Z surveyed said that they ran into higher prices, but a lower number of members in these groups reported any negative impact on their finances.

The reason for this gap comes down to two factors: lived experience and generational economics.

Baby boomers are categorized as Americans who were born between 1946 and 1964 while millennials are those born from 1981 to 1996. Of these two, a large chunk of the boomer population has direct experience with more severe periods of inflation that can influence their concerns today.

During the late 1970s, the U.S. suffered from a staggering rise in inflation at the same time as growing unemployment and wage stagnation. By 1980, the annual rate of change to the Consumer Price Index (CPI) reached 13.5% compared to 1.2% in 2020, according to data from the Minneapolis Federal Reserve. Deutsch Bank economists in March described the result of boomers living through years of high inflation as casting a “long shadow” over their views of inflation.

In contrast, the millennial generation does not possess the same level of savings as their parents or grandparents and that plays a role in their views of higher inflation. Since 1983, the annual rate of change in inflation has remained below 5% and is only now reaching beyond that.

Federal Reserve officials and the Biden administration have been mindful about any potential jump in inflation, especially as Congress moves in the direction of passing new spending legislation. Biden had touted the results of a July survey showing inflation had fallen slightly from where it was in June. He also expressed both his commitment to addressing inflation concerns and his confidence in Federal Reserve officials to make the decisions to keep the rate down.

Other economists lend some credence to millennials’ attitude toward inflation. A former Fed official suggested to Bloomberg TV in July that any surge in inflation may in fact prove temporary. There are also economists who cite price drops in certain CPI categories that fueled the earlier surge that have since cooled.

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