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Food prices are drastically up! Pensioners and seniors lose out the most

27 Oct 2017 10:18|Marcin Lipka

Rising food prices in shops affect everyone. However, the part of society that does not benefit from the last strong wage increases or social transfers in the form of the "The Family 500+ child benefit program" is affected to the greatest extent,” writes Marcin Lipka, Conotoxia Senior Analyst.

Marcin Lipka, główny analityk Cinkciarz.pl

According to Eurostat data, food prices in Poland increased by 4.7% YOY in September. Prices for this category of products increased faster in only five EU countries and the average result for the whole community was 2.3%. Additionally, Poland's food inflation is currently highest since the end of 2012.

Last year, butter in Poland increased the most - by 48%. In only four European countries a higher percentage was reported. In Germany, today, butter costs 70% more than in September 2016, but in, for example, France the price is only 7.6% higher. In Poland, the price of eggs (7.7% YOY), yoghurt (9.1% YOY) and pork (7.4% YOY) have also increased drastically.

The last few months have also meant higher spending for those who are in favour of healthier products. Compared to last September, the price of fresh fruit rose by 9.7% and vegetables by 5.8%. A slight comfort for most consumers may be the fact that in the same period the price of seafood decreased by 0.7% and carbonated beverages - by 0.4%.

Pensioners and seniors suffer the most

Theoretically higher prices in shops affect everyone in the same way. Practically, however, rising costs of purchasing food are more severe for people with the lowest income. This is well illustrated by the annual GUS survey on household budgets.

In 2016, the median of spending on food and beverages accounted for 30% of all expenses of pensioners and seniors. In the case of self-employed or unemployed households, this percentage is 23%. Pensioners and seniors make little use of the fact that e.g. the prices of clothes or footwear are falling (by 4.4% YOY). Compared to the median of all spendings, the share in this category in the case of seniors is more than half of that spent by households as a whole.

It is also natural that pensioners spend a small percentage (one-seventh) of what the rest of society spends on education. Prices in this category, however, are rising relatively slowly (by 1.3% YOY), which decreases the general inflation index, but the analysed social group does not notice it.

Significant increase in income but not in the case of seniors

According to the Polish Central Statistical Office (GUS), the average disposable income per capita increased by 7% in 2016. For households receiving the Family 500+ child benefit program, this increase amounted to 16.8% (among marriages with at least three children by 25.2%). Income in the rural area also significantly increased (by 9.8%).

Pensioners and seniors have not benefited from the recent changes in social programs and the recent rapid increases in wages also omitted them. Their disposable income increased, but markedly below the general trend and occupied the +4.1% and +4.4%, respectively. Combining the low income growth and the fact that senior citizens spend the most of their income on food, recent price increases are particularly painful for their home budgets.


27 Oct 2017 10:18|Marcin Lipka

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