Analytics, Baltic, Financial Services, Markets and Companies, Wages

Latvia experienced the fastest growth. In the second quarter of the year the average net salary reached EUR 600 – a 7.5% increase compared to the second quarter last year. Estonia's average net salary increased by 7.3%, reaching EUR 871 – the highest average net salary to date. Lithuania recorded a net salary growth of 4.4% reaching EUR 554. The average gross salary increase in the second quarter was 6.6% in Latvia, 5.8% in Estonia, and 4.6% in Lithuania.

The increasing net salaries and low inflation have a positive effect on households' budget. In Estonia the average real wage (net salary, taking into account the fluctuations of consumer prices) grew by 7.3% in the second quarter year-on-year. In Latvia and Lithuania the real wage increased 6.6% and 5.1% respectively.

In Estonia and Latvia the average real wage is already higher than before the crisis, but in Lithuania the average real wage is still lower than in 2008.

Latvia's SEB Banka socioeconomic expert Edmunds Rudzitis explained that, due to the decreasing prices of energy and food, the average inflation is low this year, close to zero or even negative. Therefore the real wages and the purchasing power have increased. This means that consumption is the main driving force behind the Baltic economies. Compared to 2014, the food, transport, and household expenses have decreased in the Baltic countries. The only exception is household expenditures in Latvia due to higher electrical power cost, but it is almost offset by the decrease in other utility costs. Fuel prices have dropped 18% in the Baltic countries, allowing household costs to drop by 6% to 9%. In addition, heating rates should also be lower this year.