There is no end in sight for price increases in Lithuania. This year, food prices will continue to grow due to more expensive supplies, retailers say.
In November last year, Lithuania’s annual inflation rate stood at 9.3 percent, according to Eurostat. It was highest in the eurozone, where the annual inflation averaged 4.9 percent.
It is estimated that in November 2021, food prices in Lithuania were 7.6 percent higher compared to a year before.
But price hikes of some products were even higher. For example, the price of potatoes increased 74 percent last year, with the prices of coffee and milk growing by around 13 and 10 percent respectively.
According to Eurostat, Lithuanians on average spend 20.3 percent of their income on food. In the EU, only Romanians spend more – 25.2 percent of their income.
Expensive supplies
According to major retailers, food prices in Lithuania will continue to grow this year as well. They say higher prices set by suppliers will be the main reason for this.
“For some time now, we have been hearing concerns from suppliers about rising production costs that are being pushed up by higher electricity and gas prices, as well as rising wages,” said Ernesta Dapkienė, head of the Communications Department at the Maxima supermarket chain.
“It is difficult to predict the extent of [price] changes, but the trends remain unfavourable,” she added.
Gabrielė Šerėnienė, head of communications at the Rimi supermarket chain, also said that prices of goods are mainly influenced by changes in supplier prices, which in turn depend on rising costs of raw materials, fuel, and energy.
“That’s why we feel price pressure in all product categories. In any case, we strive to find the best solutions so that our customers are affected by the prices changes as little as possible,” Šerėnienė said.
Meanwhile, Lidl representatives said that the retailer will try to combat rising prices by making its operations more efficient.
“We believe that, in this context, our operational efficiency will be an important advantage in maintaining price stability,” said Lina Skersytė, a public relations representative at Lidl Lithuania. “We have modern and energy-efficient buildings. Our internal processes are also organised in a way that allows us to operate as efficiently as possible.”
No reason not to grow
Despite rising prices, Lithuanians’ purchasing power increased due to higher income, according to the economist Nerijus Mačiulis.
“If we look at all products in general, food has become more affordable as average wages increased by 12 percent and the average old-age pension by 10 percent. Even taking into account such a rapid increase in prices, purchasing power has increased more,” Mačiulis said.
In his words, there is no reason for food prices to stop growing this year.
“Any cost increases are gradually transferred to the final price of the product. Some of this change has already taken place, and some will take place this year. For example, the price of gas has made fertilisers more expensive, which will translate into the higher price of agricultural production,” Mačiulis said.
“With the minimum wage rising 14 percent this year, it is hard to imagine that prices could stay the same or rise more slowly than last year,” he added.
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