All roads will lead to Poland this winter

"All roads will lead to Poland this winter," said Žygimantas Mauricas, an economist at Luminor Bank.

 

    "Interestingly, Poland currently has significantly lower prices not only for most consumer goods and services, but also for fuel.

 

    For example, the average price of petrol (A95) in Lithuania is 1.47 euros, and in Poland - 1.28 euros, i.e. in Lithuania, it is almost 15 percent. bigger.

 

    The price difference was mainly due to the weakening of the zloty, which led to a reduction in fuel excise duties in Poland. They are set in zlotys, so as the zloty depreciates, the excise duty calculated in euros decreases,” - he explained on the Facebook network.

 

    As stated, for example, excise duty on petrol in Lithuania amounts to 0.466 euros per liter, and in Poland - 0.357, which is a difference of 11 euro cents. Excise duty is also payable on excise duty, so the difference with VAT increases even more, although in Poland the VAT rate (23%) is higher than in Lithuania (21%).

 

    "In Lithuania, excise duty + VAT amounts to 0.466x1.21 = 0.564, and in Poland 0.357 x 1.23 = 0.439, i.e. the difference between excise duty + VAT is 0.564 - 0.439 = 0.125 (12.5 euro cents).

 

    The remaining price difference is due to the higher margin of fuel sellers in Lithuania due to less competition, so the total price difference increases from 12.5 euro cents to 19 euro cents,” - he calculated.

 

    Speaking about the differences in diesel prices, the economist assured that they are lower due to lower excise duty on diesel in Lithuania, but are still reaching record highs.

 

    "The average price in Lithuania is 1.36 Eur per liter, and in Poland 1.28, so the difference is 8 euro cents," he said.

 

    According to Ž. Maurico can conclude that Poland poses many challenges for Lithuania and other Polish neighbors, as it is able to attract more and more consumers and investors to Poland due to the weak zloty.

 

    "On the other hand, it may be good for Lithuania in the long run, as Polish competition will stop the inflation bubble from blowing in Lithuania, which will allow us to maintain international competitiveness. If Poland is not on our side, I think that the growth of prices in Lithuania would be significantly higher,” - he said.

 

    The Polish zloty depreciated by 4.5% against the euro over the year, while consumer prices in Poland rose by 6.4% over the year and in Lithuania by 8.2%.

 

    In 2020, consumer goods prices in Lithuania were on average 17% higher than in Poland, and consumer services by 20% higher."

The differences in food prices are even higher. Since most of our income still pays for food, going to Poland and shopping there makes sense.