Rising consumer goods prices bring down real wages
Although the most recent figures from the Czech Statistical Office gave a slightly optimistic view of rising wages in the second quarter of this year, a report in the daily Lidové noviny warns that the reality is different. The inflation in the Czech Republic is increasing faster than wages, and given the rising prices of basic goods and threats of further tax increases, the Czech consumer is left less than optimistic about the future.
Well, its means that with an average Czech monthly paycheck can get you 47 kilograms less bread now than you could get last year. Food prices have gone up overall by 7.3 percent, and energy prices have also risen year-on-year. Recent reports also confirmed that most Czech households are saving much more money than they did a year ago, which is contributing to the shrinking economy. I asked the economics journalist and commentator Chris Johnstone, what other long-term factors may be contributing to the decrease in the cost of living in the Czech Republic:
If this trend does continue what would the political ramifications be of this situation?
“There is no doubt that there isn’t much of a feel-good factor in the Czech Republic at the moment. Ordinary people are feeling the squeeze on their purses, because what they are earning isn’t keeping pace with what they’re spending. There are two factors here: commodity prices are going up around the worlds – oil prices especially. And there are fears that basic commodity prices will go up again in the near future. And then the other problem is that the government is taking more away from people. The Czech government increased the Value Added Tax, so every time people go out to buy something, they are paying more to the government, and they get less money back, when they do their ordinary weekly shop. Which probably means that a lot of Czechs are feeling that they are not so well off.”
Is this part of a greater economic frustration that may affect the upcoming elections?