"Lithuania is
going through times of absolute prosperity - money flows in rivers, and the
further they go, the faster those rivers flow. True, not into the pockets of
ordinary citizens, but from them. It is ordinary citizens who finance the
golden age of merchants, monopolists, and perhaps even officials.
The sad news is
that this trend has not and will not abate, and when real economic hardships
begin, they will most likely be dealt with at the expense of the middle class
again.
Let's start a
little further.
Tadas Povilauskas
describes the current situation in his Facebook account as follows:
"In the
second quarter, there were almost no more people who thought that housing would
become cheaper. It would seem that such expectations very clearly indicate that
housing prices will rise rapidly, but often, historically, excessive
expectations are just a warning about the situation that will soon change. A
survey conducted in June showed that 80 percent surveyed residents in Lithuania
believe that housing prices will increase in the next twelve months, 3 percent
think that housing will be cheaper, 12 percent do not expect any changes, while
the remaining 5 percent has no opinion on the matter."
People simply no
longer believe in the market and the fact that any laws based on economic logic
operate in Lithuanian markets.
Because only here
it can happen that house prices rise when demand falls drastically, and houses
are only sometimes sold for less than a few years ago. The answer here is simple and
has nothing to do with a fairy tale - it's just that the officials messed up
the market with their actions (due to non-issued building permits, only the
chosen ones can build new apartment buildings in the capital), and the same
market laws no longer apply. You can ask as much money as you want, there will still
be someone who pays.
All the more so
because the money paid not by business, but by taxpayers is increasing.
The National Audit
Office warns that the Government should avoid tax incentives and compensations
that encourage excessive consumption, which further turn the mill of inflation
and increase the public debt.
Annual inflation
was mainly influenced by fuel and lubricants, thermal energy, milk and its
products, cheese and eggs, solid fuel, bread and grain products, meat and its
products, restaurants, cafe services, gas, vegetables, maintenance and repair
of personal vehicles , an increase in the prices of oil and fats and a decrease
in the prices of clothing, information processing equipment.
In the fight
against extremely high inflation, measures that promote excessive consumption should
be avoided, which increase inflation and, as resources become more expensive,
increase the state debt, stated the State Audit Office (VK).
"International organizations recommend targeted support for the
most vulnerable and warn that boosting domestic demand makes it harder for the
European Central Bank to control inflation." Taking into account the
negative balance of risks, decisions must be made especially responsibly,
because measures that increase the deficit of the public sector can contribute
to the growth of the public debt", Jaroslavas Mečkovskis, Chief Economist
of the Budget Monitoring Department of VK, is quoted in the report.
You say everything
is very tricky and far from you and your family? Hell no. Everything is right
here, at the checkout of the nearest supermarket chain. Luminor economist
Žygymantas Mauricas explains how it works - he explained why Lithuania is an
exceptionally expensive country and why everything here becomes more expensive
much faster than elsewhere.
Especially since
the current price growth in Lithuania is the fastest in the EU, and even much
faster than in Latvia or Estonia.
The reason for
such uniqueness of Lithuania is standard economic processes: when the so-called
cost base increases, manufacturers and traders pass it on to the final
consumer. We have developed a tendency that if prices need to be increased, it
can be done this spring, because "everyone is raising the price of
production".
It was a kind of
window. Prices for consumers grew much faster than in Europe, because it was
easier to pass on costs to buyers, although producer prices increased in the
same way as in other EU countries, where consumers felt the price rise
less," explains Ž. Maurice.
The economist
reminds how expensive eggs are for consumers in France - they cost a very long
time on the shelves the same, although the manufacturer and wholesaler jumped
very significantly. Only later did the consumer price increase a little, much less
than in Lithuania. This is a good example for the user. France is presented as
an example of a relatively stagnant market that benefits the consumer, where
change on the shelves is very slow.
Dans Arlauskas,
head of the Confederation of Lithuanian Employers, commented on what is
happening with us on his Facebook account:
"It has to be
cheap, but not too cheap. A situation where there is disagreement as to why
inflation is so high is very beneficial to those with market power. Consumer
protection organizations, like the Competition Council, are too weak to
influence the rampage of oligopolistic business entities. What can be changed?
I believe that the current ruling majority does not have the vision
to do this.
Appealing to the
war in Ukraine as the root cause of all the troubles is convenient, but it will
not help to control inflation. The price chaos will continue because I just
don't see anyone who can control it. This requires an understanding of what is
happening and the political will to implement concrete measures. Unfortunately,
there seems to be no shortage of political will, but when there is a lack of
understanding, an excess of political will leads to the path of
"deception".
To put it simply,
for now we continue to successfully splash money and instead of solving real
problems (that is, the same bureaucratic system that restricts the entry of
other players to the market, and increasing the supply, fixing it, reviewing
the tariffs of state monopolists, evaluating real profits and investments), we
just enjoy the good living for borrowed money. The growth of Lithuanian
government sector expenditure is one of the highest in the EU. Inflation is the
same. Just a coincidence? There is no deeper analysis of the extent to which
such an increase in costs affects our inflation.
What will this
mean for the average citizen who is already afraid to go to the grocery store
or stop at the gas station? There is no good news. Inflation will decrease.
Theoretically. The fact that several tens of percent more expensive products
and services will become cheaper by a few percent will not radically change
life. Wages, if you are not a public sector employee, are likely to stop
growing in leaps and bounds.
However, a new
wave of new taxes and tariff increases is still waiting. Some companies and
institutions will continue to live only better. At the expense of all of us.
And unfortunately, there are no changes on this front. The middle class will
suffer the most: they will pay all the taxes and fees, because they will not
receive any benefits and favors in the run-up to the elections."
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