of interest, but also policy effectiveness. recent research by central bank staff published yesterday is an example of applying a distributional lens to economic analysis. [ 7 ] drawing on data from the household finance and consumption survey, the article examines the impact of price - driven increases in spending on food, energy, rent and mortgage interest payments for different households across the income distribution. [ 8 ] in doing so, it explores the distributional impact of the current, and expected, consumer price increases and of our monetary policy response, on household economic resilience. from the perspective of central banks, resilience is an important concept to measure. the level of financial resilience, related to household or firm indebtedness, is crucial for our financial stability mandate. while the level of economic resilience, which relates to households ’ income, spending, wealth and indebtedness, helps us think about the implications for aggregate consumption, saving and investment. positively, the analysis shows that the economic resilience of irish households improved in the run up to, and during, the pandemic ; the result of incomes growing faster than spending between 2018 and 2020. however, with the additional negative shock of the russian invasion of ukraine, the situation has altered very quickly. furthermore, it is clear that, households are not equally exposed to consumer price increases. while households in the most precarious of financial situations spend roughly two fifths of their disposable income on food, energy, rent and mortgage servicing costs, the most affluent households spend a much lower share, around a quarter. and this is only part of the issue, because the impact of higher prices also depends on whether people have a stock of savings to draw upon to cushion the blow. and our analysis also shows that lower income households are also less likely to have accumulated savings, and are therefore less likely to have any buffer between money coming in and outgoings on a monthly basis. the scenarios we look at in the analysis show that these households are much more at risk of being pushed towards poverty by the impact of these higher prices. what are the implications for policy? fiscal policy is critically important in distributing the costs of this shock through the economy but it cannot alleviate all the effects. ireland is an energy importer, and when oil and gas prices rise it represents a negative ( terms of trade ) shock, like a tax on the economy. and ultimately the economy needs to meet this cost out of our collective resources. we

statement surrounding this and earlier monetary policy decisions are available on the ecb website. [ 6 ] see ahn et al., 2017, kaplan et al., 2018, auclert, 2019 and kopiec, 2019 for examples of implications for policy effectiveness. slacalek et al., ( 2020 ) also discuss the sensitivity of household exposure to interest rate changes and labour income fluctuations on the transmission of monetary policy. [ 7 ] arrigoni s., boyd l., and mcindoe - calder t., ( 2022 ). household economic resilience. quarterly bulletin 4 – signed article. central bank of ireland. [ 8 ] hfcs data collected by the central statistics office in the second half of 2020. ©2022 central bank of ireland