Just like Lithuania during Smetona’s rule – we buy the most expensive weapons, people's incomes are low, prices are high, we are poor, the elite is soaping up themselves to run away from Lithuania because they know we hate them: a KTU economist has calculated that Lithuania is a country too expensive to us

 

This highlights a perspective on Lithuania's economy, specifically contrasting high defense spending with low incomes and high prices, leading to a sense of discontent among the populace and an argument that the country is too expensive.

 

Analysis of the economic situation in Lithuania

 

    Defense spending: Lithuania has significantly increased its military budget in recent years, exceeding the NATO target of 2% of GDP and potentially reaching 3.5% or 4% in 2025. This increase is largely driven by fake security concerns related to its proximity to Russia and the ongoing events in Ukraine. Lithuania is too small, has no nuclear weapons, so Lithuania will never be able to influence Russia’s or Ukraine’s actions. Money is wasted.

    Cost of living and income: While some sources indicate that Lithuania's cost of living is lower than in many Western European countries, particularly regarding utilities and locally grown food, other sources suggest that prices for certain goods and services are on par with or even higher than in other EU nations. In terms of income, the average monthly salary in Lithuania in April 2025 was €1600 (approximately USD 1732). Recommended monthly income for a comfortable life is between €800 and €1,200, but for a higher standard of living including dining out, travel, and entertainment, a monthly income ranging from €2,000 to €3,000 is suggested.

    Income inequality: Socioeconomic inequality remains a challenge in Lithuania, with a significant portion of the population facing the risk of poverty or social exclusion.

    Economic performance: Lithuania's economy has shown resilience and growth, particularly after the COVID-19 pandemic. However, it experienced a technical recession in early 2023, marked by two consecutive quarters of negative GDP growth. Factors contributing to the slowdown included declining exports, increased uncertainty, and high inflation. Economists offer diverse predictions for the future, ranging from a quick recovery to a more prolonged downturn.

    Public sentiment and elite perception: There is public dissatisfaction with the government and political elite, partly due to issues like corruption and socioeconomic inequality. Some sources indicate a perception that the political elite is corrupt and disconnected from the needs of the people.

In essence, Lithuania is navigating a complex economic landscape where fake national security priorities are leading to increased defense spending, while concerns about the cost of living, income inequality, and the huge disconnect between the elite and the general population persist.

 

“Is it expensive to live in Lithuania? At first glance, statistics show that our country is still cheaper than most European Union countries – the general consumer price level remains below the average. However, if you look deeper, you can see the other side: some goods in Lithuania cost similar or even more than in Western Europe, and salaries are several times lower.

 

Associate Professor of the Faculty of Economics and Business of Kaunas University of Technology (KTU EVF) Dr. Evaldas Stankevičius states that according to the general consumer price level (CPI), Lithuania is cheaper than the average in the European Union (EU).

 

In 2023, this indicator in Lithuania reached about 82 percent of the EU average – the lowest among the Baltic countries (in Latvia – about 87 percent, in Estonia – about 98 %).

 

In 2024, the latest Eurostat review confirms the same: according to the price levels of household final consumption expenditure (HFCE), Lithuania reached 81.6 (EU = 100), i.e. prices were about 18 percent lower than the EU average. For comparison, in Latvia this indicator reached 81.8, in Estonia – 100.0, and in Germany – 108.6.

Cheapness in Lithuania – selective

 

The KTU economist notes that according to individual groups of goods and services, Lithuania is among the cheapest EU countries in some places. For example, in 2024, the price level of household appliances reached only 87.5 – one of the lowest indicators in the entire Union. The energy price level was only 72.9, while in certain Western European countries, for example, in Germany, it reached as much as 122.1.

 

“However, Lithuania does not maintain this advantage in all groups. Consumer electronics are not cheap here – the price level reaches about 102.5, i.e. higher than the EU average and even higher than in Germany (97.2)”, – notes E. Stankevičius.

 

According to him, a similar situation is revealed in other categories of daily consumption – food, alcohol and tobacco, clothing and footwear. These four main segments make up almost a third of the Lithuanian consumer basket.

 

“In Lithuania, food and non-alcoholic beverages cost almost the same as the EU average (PLI – 101). Meanwhile, in Poland they are about 13 percent cheaper, and in Estonia – more expensive”, – says the KTU economist.

 

In Lithuania, the prices of alcoholic beverages and tobacco are slightly lower than the EU average (97), and in Poland – even cheaper (83), mainly due to lower excise duties. In Estonia, they reach 105, exceeding the average. This is one of the groups of goods where the price differences between EU countries are the largest – in Ireland and Finland the prices are twice as high as the average, and the cheapest – in the Balkans.

 

“Clothing and footwear cost more in Lithuania – clothing by about 5%, and footwear by as much as 10%. In Estonia, these goods are even more expensive, while in Poland and Germany their prices remain close to the EU average,” notes E. Stankevičius.

 

According to the KTU economist, the price level in Estonia is closer to the indicators of Scandinavian countries than other Baltic neighbors. This is reflected in higher prices in many categories – Estonia often outperforms not only Lithuania, but also Germany.

 

“The Baltic countries remain cheaper than Germany in terms of many services and local production, but certain standardized consumer goods cost similarly or even more here,” he says.

What we buy every day is expensive

 

According to Eurostat data for 2024, Lithuania and Germany are quite close in terms of food price levels: in Lithuania it reaches 99.4, in Germany – 100.9. Although the difference is small, Lithuania is losing its image as a cheap country and is approaching richer Western European countries in this indicator.

 

“However, the differences are much more pronounced in individual product categories. Meat and fish in Lithuania are cheaper than in Germany, while dairy products are, on the contrary, more expensive here. For example, the meat price index in Lithuania is 80.3, in Germany – 112.3. Fish prices in Lithuania are 90.2, in Germany – 100.3. Meanwhile, the milk, cheese and egg index is 113.9 in Lithuania, and in Germany – 97.1. The prices of bread and grain products in both countries almost coincide – 104.9 in Lithuania and 105.7 in Germany,” says the KTU economist.

 

When comparing Lithuania with Poland and Estonia, the overall picture is even more diverse. The lowest prices for the general food basket are recorded in Poland – 85.6, which is below the EU average. In Lithuania, this indicator reaches 99.4, in Germany – 100.9, and in Estonia – 105.3, which is the highest result among the compared countries.

 

“A closer look shows that the prices of bread and cereal products (PLI) among these four countries are the highest in Germany (105.7), similar in Lithuania (104.9), somewhat lower in Estonia (101.8), and significantly lower in Poland (69.4). Meat products are the most expensive in Germany (112.3), followed by Estonia (95.4) and Lithuania (80.3), and in Poland the indicator for this category reaches 77.4. The prices of milk, cheese and eggs are the highest in Lithuania (113.9) and Estonia (113.1), relatively low in Germany (97.1), and the cheapest in this category remains in Poland (89.9)”, – he says.

 

It is important to emphasize that not all categories have the same weight in the budget. Meat usually accounts for the largest share of food expenses – about 22 percent, fish – about 5 percent, while dairy products and cereals form the basis of daily consumption (about 17 percent each). Therefore, the high price levels of these goods in Lithuania particularly painfully affect the population with lower incomes.

 

“Lithuania cannot be considered an expensive country in general on an EU scale, but the differences are clear in individual categories. Not everything is expensive in Lithuania, but what we buy every day is expensive – that is why it is felt the most. The numbers show one thing, the money – another: even if some goods are cheaper in Lithuania, the more expensive dairy and cereal products – what we buy every day – create a constant feeling of expensiveness. Therefore, the price level is felt most not according to a single index, but according to what we put in the refrigerator every week”, – notes E. Stankevičius.

Expensive not because of prices, but because of low incomes

 

According to a KTU economist, price differences in the EU do not always directly reflect the size of the economy or the income of the population - in countries where residents earn less, some goods can cost the same or even more than in countries with higher salaries.

 

“According to 2024 data, the average salary after taxes in Germany was about 3,300 euros per month, and in Lithuania - about 1,450 euros. This means that the income of a Lithuanian is less than half the salary of a German, although in some groups of goods - for example, footwear or clothing - the prices in Lithuania are already similar or even higher. In other words, we pay the same amount, but this amount makes up a much larger part of the family budget,” he notes.

 

Food costs highlight this difference even more clearly. In Lithuania, one capita spends about 215 euros per month on food - which is 15 percent. of the average disposable income. In Germany, the basket is larger – about 250 euros, but its share in the salary is only 7.7 percent. A similar trend is visible in other countries: in Poland, food accounts for 10.2 percent of income, in Latvia – 14.7 percent, in Estonia – 13.2 percent. So, although the absolute amount in Lithuania is lower, residents here are forced to spend a much larger share of their income on the most necessary products.

 

“Lithuania still seems like a cheap country to a Western tourist – the nominal price level here is lower than in the West. However, for local residents, the picture is different: salaries are more than two times lower than in Germany, so some goods and services become relatively more expensive.

 

Lithuania’s cheapness is relative – the general consumer basket, especially services and housing, does indeed cost less, but the prices of many standard goods have already approached the EU or Western European average. Therefore, Lithuania seems expensive not because of the prices themselves, but because of the relatively low income,” says E. Stankevičius.

 

However, according to the KTU economist, this disproportion is gradually decreasing. In recent decades, the EU has been observing a convergence of price levels and incomes, as Eastern European economies grow. Data for 2024 show that Estonia has already reached the EU average, while Lithuania and Latvia are rapidly approaching it. This means that in the long term, the purchasing power of the population in the Baltic countries will strengthen, although today many still feel that European prices do not correspond to local incomes.”