Expensive energy deprives households of tens of thousands of crowns

Between June 2021 and June 2022, households’ energy expenditures increased by an average of 45.2 percent, and they lost more than CZK 10,000 for each member due to energy prices. The average cost per household was CZK 23,734. This results from an analysis by the Research Institute of Labour and Social Affairs (VÚPSV).

“The most affected groups were pensioners, residents of small villages, homeowners, and low-income households. Households with the lowest incomes lost CZK 21 000,” said its author Filip Mandys, adding that this is a much worse impact than for high-income households, given their incomes. For them, it was CZK 26,000.

“The results suggest that the share of energy expenditure in total expenditure is most affected by the number of children and pensioners in the household – it increases by 6.6 percent and 24 percent, respectively, for each additional child or pensioner,” the analysis said.

While spending on consumer areas such as restaurants, recreation, and culture can be significantly reduced, the analysis says this is not possible for the energy in most cases. This is because they include necessities such as lighting, cooking, and heating and are, therefore, more price-inelastic.

The study’s findings suggest that the government should try to make long-term structural changes to energy policy, for example, by creating incentives to install modern technology such as smart meters and introducing tax credits and deductions for installing energy savings.