EU cost of living continues to rise much faster than wages
The weekly shop for groceries at the supermarket is still no relief for EU citizens’ wallets, as food prices kept rising in 2023, according to the latest data from Eurostat.
After significant increases in 2022, the prices of basic food items such as eggs, butter, potatoes, and olive oil have not shown much easing in 2023.
From January 2021 to September 2023, butter increased by 27 percent, eggs by 37 percent, and potatoes by 53 percent. Meanwhile, olive oil prices have risen by 75 percent.
"The reality behind these figures is millions of people struggling to put food on the table for themselves or their families despite working long hours in tough jobs," Esther Lynch, general secretary of the European Trade Union Confederation (ETUC) said.
In fact, while unemployment remains low, at six percent in September 2023, wages have not kept pace with rising food prices so far, and the loss of purchasing power does not affect all countries and households equally.
The effects of the Covid-19 pandemic and the war in Ukraine have led to a cost-of-living crisis that has been particularly felt by low-income households, as basic goods account for a higher proportion of their total consumption.
"Wages are still failing to keep up with the cost of the most basic foodstuffs, including for workers in the agriculture sector itself, forcing more and more working people to rely on food banks," Lynch said.
Over the last three years, nominal wages have risen by 11 percent in the EU and 10 percent in the eurozone. This is seven times less than the increase in olive oil prices.
Energy bills have also been an additional burden on EU citizens. In the first half of 2023, energy prices rose in 22 member states.
People in Lithuania and Romania were among the hardest hit, with year-on-year increases of 88 percent and 77 percent respectively.
Another way of looking at this is through median disposable income, which provides a measure of average living standards across the different member states — although it does not indicate how income is distributed within the population.
Unsurprisingly, the highest levels of per capita income in 2023 were recorded in the central and northern EU countries. And the lowest in the southern and eastern member states such as Latvia, Croatia, Portugal, Greece, Romania, Slovakia and Bulgaria.
Some of these countries are the same as those where income is less equally distributed, namely Bulgaria and Latvia but also Lithuania, which have the highest income disparities in the EU [as measured by the Gini coefficient].
On top of this, the ETUC points out that the rise in food prices has come at the same time as a huge increase in profits in the agricultural sector.
Rising corporate profits have accounted for almost half of the rise in European inflation over the past two years, as companies have raised prices more than the soaring cost of imported energy, the International Monetary Fund said in June.
"The evidence shows that major corporations are profiting from the increase in prices, with profit increases in agro-industry second only to those in the energy sector," Lynch commented.