The cost of living crisis, and rising energy prices, are hitting families across Europe hard.
Estonia in particular is experiencing the highest levels of inflation in the eurozone, at 22.4% in October compared to 6.8% just one year ago — although there are some hopeful signs this will ease slightly.
So what’s it like for Estonians who have to balance their budgets, cope with the fast-rising prices, and yet still somehow provide food, clothes and heat for their children with winter rapidly approaching?
We talked with two families, and an Estonian supermarket chain, to hear their stories.
Harles and Hedvy: Soaring budgets for food and firewood
Harles Tiitsmaa and his wife Hedvy live in the southern city of Tartu with their 31-month-old daughter.
He’s one of the generation of Estonians who went off to work in Finland in construction when wages on the north side of the Baltic Sea were much higher than at home, but returned a few years ago when Estonian salaries started levelling up.
Now he works in a fisheries job for the government and spends most of his days outside in the fresh air on small lakes around Tartu — he calls it his “dream job” — while Hedvy teaches French and drama to middle school students.
“Food prices went up. Before the war, our weekly budget for grocery shopping was €70 and now it’s €90 or more, it depends,” Harles told Euronews.
Electricity costs have gone up too, he explained, by some 150%, but the family now has a fixed price contract of 13 cents per kilowatt for their two-room apartment. Last year, said Harles, it was just 6 cents, or less, per kilowatt.
“Lots of people use firewood to survive the winter. Last year, it was €40 for one cubic metre and now it’s €100 or more. The government has a support system for electricity bills and gas, but not for firewood and it’s hard to prove how much you pay because most of the payments are in cash and you don’t get a receipt,” he explained.
The average wage in Estonia, said Harles, is €1,600 but his wife Hedvey earns only €1,400 even in a good profession like teaching.
“Our boss says that maybe next year we will get a 5% pay raise, but interest rates are going to eat that. It’s a shitty raise.”
Martin and Ats: Coffee, dog treats and special offers
Civil engineer Martin Kabral also lives in Tartu with his seven-year-old son Ats, in the home he spent two years renovating.
“Heating and electricity prices have definitely spiked, and the government has been helping out with a universal electricity system,” the single dad told Euronews.
That government scheme, run by Eesti Energia, buys electricity at a regulated price for the next four years and is intended for home consumers.
The cost is set at just over 19 cents per kilowatt, and anyone in Estonia whose current contract is more expensive will be automatically transferred to the new, government-backed, universal electricity plan instead.
“When it comes to the supermarket, yes, I have started looking more closely at the price of things I buy, and choosing alternatives if possible, and I’m eat out less frequently than before the current cost of living crisis,” he said.
“If I see any special offers I do buy the cheaper things, or the items that are on sale. For example maybe a pack of coffee, I look carefully at the kilo price and if the kilo price for a bigger bag is less, of course I buy it.”
Although grocery prices in Estonia have risen quickly since the Russian invasion of Ukraine, it can often be tough to keep track of incremental increases, especially if you go to the supermarket more than once a week.
“I don’t have a set budget, but I would say weekly prices have gone up maybe 20 or 30% already this year,” said Martin, adding that he noticed dog food especially, for his golden retriever, has jumped in price.
“I saw a packet of dog treats which before were about €4 per pack, and yesterday it was €8.50. So I didn’t buy it. The dog got cheaper treats, not the ones he was hoping for!”
Supermarkets struggling with producers and costs
One of Estonia’s biggest supermarket chains, Selver, has seen prices fluctuate throughout the year, and seen customer shopping habits change too.
“There were periods of time when prices were changing every week in some categories like meat and dairy,” said Rivo Veski, Selver’s communications manager.
“What we see is customers buying more products that are in campaigns, or not buying such premium products as before but buying items from more basic categories,” Veski told Euronews.
Selver, with 74 stores across Estonia, has seen a rise in the cost of local food products in particular, as manufacturers, in turn, see their own prices rising.
This has meant that it has been harder to compete with foreign supermarket chains who are able to import products on a larger scale from other EU countries, like Poland.
As Selver focuses on local Estonian producers, then rising production costs are inevitably passed along to the customers.
“The more local the businesses, the more expensive the products are,” said Veski, which means the items that Estonian shoppers put in their basket each week is changing.
“In the past, we saw that people made more of these emotional decisions in the store, and maybe bought a new product or premium product just to try it once. But all those decisions have now become rationalised, people buying only what they need, and asking ‘do we really need to have this?'” said Rivo Veski.
Why have prices in Estonia risen so fast?
According to the Bank of Estonia, around half of the increase in the nation’s cost of living has come from the rapid rise in energy prices which happened after Russia invaded Ukraine in February this year — and a lack of capacity in the Baltic countries, coupled with a drop in Russian energy production.
“Higher energy costs will gradually be passed through into the prices of other goods and services. Inflation is being pushed up by strong demand, which supply has not been able to keep up with,” the central bank wrote.
Another big factor in Estonian inflation has been high food prices.
“This is partly because the higher cost of energy has been passed into the production costs of businesses. On top of this, the sanctions on Russia and the supply problems that were initially caused by the pandemic have raised the prices of inputs for a range of products, pushing up the price of end products for the consumer,” the Bank of Estonia explained.
“When setting their prices, Estonian businesses have also had to consider faster increases in wage costs than businesses in many other European Union countries have.”
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