Why are prices European, and salaries Lithuanian?

 

The phrase "prices European, and salaries Lithuanian" is a common expression in Lithuania that highlights the perceived disparity between the cost of goods and services, which are seen as approaching Western European levels, and local salaries, which are significantly lower than those in major Western economies like Germany.

The core issue is a difference in purchasing power. While the nominal price level might still be slightly lower in Lithuania for some items, the share of a local's income required to purchase those items is much larger than for someone in Germany.

Salary Comparison

Median salaries in Lithuania are substantially lower than in Germany:

Country

            Approximate Median Net Monthly Salary      Source/Date

Lithuania          €1,147 (as of October 2024)  Sodra, 2025

Germany         €2,687+ (approximate, based on city data)    Paritydeals

 

    Lithuania: The median net monthly salary was €1,147 in October 2024, meaning half of the employees earned less than this amount after taxes, and the other half earned more.

    Germany: Germany has a significantly higher salary range. While a precise national median net salary for 2024 was not found in the search results, data comparing specific cities shows average net monthly salaries in places like Augsburg around €2,687.

 

The average annual net earnings across Germany in 2023 were approximately €38,086, which is over twice the average annual net earnings in Lithuania.

 

The Impact of the Disparity

This income gap means that a Lithuanian resident must allocate a much larger portion of their budget to essentials, such as food or housing, compared to a German resident. For instance, one report noted that a basic basket of food in Lithuania made up 15% of average disposable income, compared to just 7.7% in Germany. This economic reality is the basis for the popular local expression.

 

 This situation cannot last long for the Lithuanian elite. Just like in America, when people elect populists, all the pleasure for the elite ends.

 

“In Lithuania, some food products are already more expensive than in France, Austria or Scandinavian countries. Food prices have reached the European Union average. Meanwhile, the European Central Bank warns that food in Europe will become more expensive. Some countries are resorting to VAT exemptions, so residents are also waiting for action from the Lithuanian government.

 

Why are prices European, and salaries Lithuanian?

 

Food prices in Lithuania are already equal to the European Union average.

 

“Comparing September of this year with last year, all products have increased in price by 3.5 percent,” said Dainius Dundulis, owner of Norfa.

 

For example, Lithuanians pay more for bread than the Dutch, Spaniards, Hungarians or Poles. And cheese and milk are more expensive here than in Sweden, Finland, Austria or France.

 

We spend a fairly large portion on food products.

 

For example, oil in Lithuania is about a fifth more expensive than the average in the European Union. However, meat, fish and some vegetables are cheaper.

 

“We spend a fairly large portion on food products. In Lithuania, about a third of income goes to this,” explained Greta Ilekytė, senior economist at Swedbank.

 

According to the European Commission, one in three Europeans is worried about whether they will still be able to buy the most necessary food products when they are so expensive.

 

Meanwhile, the European Central Bank warns that inflation is stabilizing, but this will not change food prices.

 

“For example, coffee, chocolate, olive oil are definitely not becoming more expensive because there are certain problems within the country. This is happening due to global events,” G. Ilekytė asserted.

 

“When taxes are increased, it goes without saying that prices also increase, because taxes are an integral part of prices,” said D. Dundulis.

 

The statistics of European Union countries do not show tax benefits.

 

“VAT has been reduced in many countries, for example, the price difference with Poland is 16 percent,” the owner of “Norfa” claimed.

 

“The Latvian parliament is discussing the possibility of reducing the VAT rate for certain food product groups, but a decision has not been made yet. However, it seems that Sweden has already made such a decision,” said G. Ilekytė.

 

Lithuania does not even want to consider what other countries are resorting to. According to the head of the Bank of Lithuania, the benefits will not bring the desired result, and in addition, the budget would also lose money.

 

“They were implemented in various countries during periods of higher prices and it was not a great success,” shared the head of the Bank of Lithuania, Gediminas Šimkus.

 

Residents, in turn, are outraged because they pay the same amount for food as in richer countries, but the salaries they receive are not comparable to those countries.

 

“You want salaries and pensions to be higher. However, we know very well that from next year they will impose additional taxes again,” said D. Dundulis.

 

Compared to other European Union countries, Lithuania is still in the top ten from the bottom in terms of salaries. Although economists calculate that the purchasing power of the population has grown the fastest.

 

“We have definitely overtaken Bulgaria, Romania, Latvia, we are below Estonia, but we have definitely come closer to the Spaniards,” said a senior economist at Swedbank.

 

However, rising salaries are one of the main reasons why food is becoming more expensive in Lithuania.

 

“We have to accept that we cannot have both goods,” explained G. Ilekytė.

 

Economists calculate that over the past decade, food prices have increased by 70 percent, but salaries have increased as much as three times.

 

The average salary in Lithuania in 2015 reached 600 euros, and now it is almost 1.5 thousand.”