Unfortunately, Latvian households must take into account that the relatively careless summer season is about to be followed by autumn, which will bring increased costs in several items of households’ expenses. This means that financial planning will become essential for an even larger part of our population.
This autumn personal finances will be exposed not only to the annual expenses associated with sending children to school (last year parents admitted these costs accounted for an average of 100 lats per child) and food price increase triggered by the end of fruit and vegetable season, but also the increased electricity, gas and heating tariffs.
Estimates made by Swedbank Institute of Private Finance show that most of Latvia’s residents will have to pay the increased electricity tariff as of autumn this year. In terms of monthly bills the average increase will not exceed 10 LVL; however, if people stick to their electricity consumption habits, from a yearly perspective this is a substantial amount of money that is taken away from family budget.
The coming heating season raises more concerns among people. It is obvious that for many each heating season just like the first snow comes as “a surprise”. We seem to be aware of these inevitable events, yet most of us are still caught by surprise. Already last year many people were concerned about their capacity to pay the heating bills, and according to the Latvian Association of Local and Regional Governments as at the end of last heating season the total debt for heating services had doubled in comparison with the previous year (in some cities debtors account for up to 29% of all clients).
However, a couple of days ago the new natural gas tariffs were introduced, the increase of which can mostly be attributed to the changes in taxes. Application of excise tax to natural gas triggered an immediate reaction from heating suppliers. Already today we can read in mass media about the heating supplier of Riga city JSC “Rīgas Siltums” working on draft heating tariffs. Most likely the new tariffs will be introduced in the beginning of the coming heating season and according to current estimates the increase could reach 15%. For households that spend up to 80% of their utility expenses on heating during the winter this will bring additional strain on their budgets.
Of course, one may hope that the coming winter will be warmer than the previous, and the heating bills will be smaller even with the higher tariffs. However, one should not count on it, especially taking into account the fact that there are only a couple of months left before the heating season and this time should be spent on preparing for the harsh winter. This means that summer is the high time for households that have not done it before to plan their finances for several months ahead, including autumn and winter and taking into account the potential increase in tariffs. It seems that this autumn for many households budget planning will be the only way of keeping in the black.
