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Objective: Income inequality affects consumption structure via changes in the composition of expenditure basket. Shocks, fluctuations, disparities, and dispersions of income inequality, is expected to be transmitted to consumption expenditures. These shocks might induce inequalities in consumption expenditures. This paper tries to measure the amount of such consumption expenditures inequalities that are derived from income inequality. Method: To measure the consumption expenditures inequality and income inequality, the variance of logs is employed. For this purpose, Iranian urban households’ data of the period of 1982 to 2007 is used. To analyze relations between variables, panel data methodology is applied. Findings: All fluctuations of income distribution do not translate in consumption expenditure distribution. Conclusion: The distribution of households’ consumption expenditure in comparison to the distribution of income is less subjected to fluctuations and variations.

Keywords: consumption expenditure inequality, household budget, income inequality, Iran.

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