354 euros for living: the number of poor is increasing, although the government promises benefits and a better life

After the increase in the prices of food and other goods and services, not everyone has enough income to meet even the basic needs. However, they have to live on 354 euros per month.

Economists note that now inflation has decreased, prices are no longer increasing, but they are still at almost 50 percent. higher than a few years ago.

At that time, the Ministry of Social Security and Labor assures that various benefits have increased. However, people are not comforted by this.

Spending most of your income on food?

Petras Čepkauskas, head of the food section of the price comparison portal pricer.lt, is convinced that the increased prices of food products contributed to the increase in poverty to a large extent.

“The state did not deal with inflation, or rather, it did not even try to deal with it. The last time the government increased incomes for budget workers and people on social assistance was at the beginning of 2024. Until then, they somehow survived. But, I think, that increase in income will not solve anything.

Now everyone is explaining about falling or strongly reduced inflation, but no one has compensated for the previous price increase”, noted the food price specialist.

According to him, in four years, the general inflation of goods and services increased by about 35 percent, and that of food by about 50 percent.

“And people’s incomes really did not grow at such rates. “People who earn less spend 50 percent of their income on food,” P. Čepkauskas calculated.

The number of poor has increased

According to the latest data of the State Data Agency, the level of absolute poverty in the country in 2023 was 6.5 percent compared to 2022, it increased by 2.7 percentage points.

in 2023 about 187 thousand of the country’s population lived below the absolute poverty line.

“In 2023 the absolute poverty line was 354 euros per month for a single resident and 743 euros for a family consisting of two adults and two children under the age of 14.

As the amount of income calculated by the Ministry of Social Security and Labor to meet the minimum needs of a person for food and non-food (goods and services) increased, the absolute poverty line increased by 32.6 percent compared to 2022,” the State Data Agency announced.

According to the agency, the absolute poverty level of persons of working age was higher than that of children under 18 years of age or persons of retirement age. in 2023 it accounted for 6.9 percent. and compared to 2022, increased by 2.6 percent.

Absolute poverty level in households with children in 2023 accounted for 5.6 percent. and increased by 3 percent compared to 2022. In households without children, the level of absolute poverty increased by 2.6 percent during the year. and 2023 accounted for 7.4 percent. According to the composition of the household, persons living alone (11%) and persons living in households consisting of one adult and dependent children were most often in absolute poverty (absolute poverty level – 11.6%).

Among employed persons, 3% were below the absolute poverty line, among the unemployed – 32.7%, and among old-age pensioners – 6.2%. Compared to 2022, the absolute poverty level of working persons increased by 1.9 percentage points, among the unemployed – by 8.5 percent, and among old-age pensioners – by 2.4 percent.

Poverty was caused by rising prices

The Ministry of Social Security and Labor commented that the latest official actual poverty indicators published by the State Data Agency reflect the data of the survey conducted in 2023 about the income of the population in 2022.

“In 2022 The war launched by Russia against Ukraine severely damaged the economy of the entire Europe, caused a wave of high inflation, so all these indicators must be evaluated and interpreted taking into account this context.

At the same time, the increase in the absolute poverty level was influenced by a very significant increase in the size of the minimum consumption needs (MVPD) (as it is used as the threshold of absolute poverty). This growth was influenced by inflation. Compared to the previous year, MVPD increased by almost 33 percent. (2022 MVPD EUR 267, 2023 MVPD EUR 354). Absolute poverty level in the country in 2023 amounted to 6.5 percent compared to 2022, it increased by 2.7 percentage points,” the ministry explained.

She testified that despite the increase in poverty, social benefits were increasing. According to the ministry, social benefits have a very significant impact on reducing absolute poverty.

“Social benefits had the greatest impact on the absolute poverty level of one adult with children, and the lowest absolute poverty level among pensioners,” the ministry commented.

Wages will increase and consumption will increase

At that time, the economist calculates the reduced inflation and predicts the recovery of the Lithuanian economy.

Swedbank’s Chief Economist Nerijus Mačiulis predicted that this year the growth of the Lithuanian economy will be the fastest among the Baltic countries.

“Last year’s problems are in the past, we are currently observing more and more signs of economic recovery. At the beginning of the year, both retail trade and manufacturing started to grow, and the expectations of many sectors improved. However, the recovery of demand in the export markets will be neither strong nor even, so the main driver of this year’s growth will be domestic demand”, predicted N. Mačiulis.

In March, annual inflation in Lithuania fell to zero, and the prices of goods alone were 2.4 percent lower than a year ago. Economists reduce this year’s average inflation forecast to 1 percent, and increase the average wage growth forecast to 9.2 percent.

“Due to the faded inflation and rapidly growing salaries and social benefits, the growth of the purchasing power of Lithuanians this year will be one of the fastest in the European Union. After last year’s decline, consumption should increase by almost 4 percent this year,” said N. Mačiulis.