Household budgets across the OECD are struggling to keep pace with inflation as fresh data reveals that income growth has slowed sharply even as GDP ticks higher. This divergence is playing out in vastly different ways across member nations. In the first quarter of 2026, real household income per capita in OECD countries increased by just 0.2%, a notable slowdown from the 0.6% rise recorded in the final quarter of 2025. Over that same period, real GDP per capita grew by 0.3%, edging up from the 0.2% growth seen in the last quarter of 2025. While GDP growth tracks overall economic activity, household income growth reflects the actual resources available to families for saving or consumption.
Of the 21 countries for which data is currently available, 13 recorded an increase in real household income per capita, while the remaining eight saw a decline. Among the G7 economies, real household income per capita rose by 0.2% in the first quarter of 2026, though the performance varied significantly by nation. Italy saw a rebound, with real household income per capita increasing by 0.8% after a 0.9% fall in the fourth quarter of 2025. This recovery was largely driven by higher employee compensation linked to a drop in the unemployment rate from 5.7% to 5.4%, which effectively offset a decline in social benefits. During this same period, Italy's real GDP per capita growth held steady at 0.3%.
Other G7 nations showed modest gains, with Canada, Germany, and the United States each recording a 0.2% increase in real household income per capita. These figures represent a shift from the fourth quarter of 2025, where those same countries saw growth rates of 0.0%, 0.1%, and -0.2%, respectively. In contrast, the United Kingdom experienced a 0.8% fall in real household income per capita following a 1.1% increase in the previous quarter. This decline in the UK is attributed to a higher tax burden on income and wealth, partly resulting from a reduction in the capital gains tax allowance, alongside lower net social benefits and stronger inflationary pressures. Notably, the United Kingdom's real GDP per capita rose by 0.6% during the same period, following two consecutive quarters of zero growth. France also recorded a slight decrease, with real household income per capita edging down by 0.1% after a 0.3% increase in the final quarter of 2025.
Outside of the G7, some nations saw significant growth. Hungary recorded an acceleration in real household income per capita, rising from 1.7% in the fourth quarter of 2025 to 6.0% in the first quarter of 2026, driven by a 6.3% rise in employee compensation. This growth far outpaced the 0.9% increase in Hungary's real GDP per capita. Chile also saw a 4.8% rise in real household income per capita, following no change in the previous quarter, thanks to higher compensation for employees and the self-employed, as well as an increase in net property income.
Conversely, the sharpest declines in the first quarter of 2026 were recorded in Greece and Austria. Real household income per capita in Greece contracted by 3.6%, marking the steepest drop among all OECD countries. Austria followed with a 2.8% decline. According to the OECD, these contractions were primarily caused by two factors: a reduction in net social benefits to households and a decrease in net property income, which includes dividends, interest, and investment income.
