The structure of household budgets in Latvia differs significantly from the European Union (EU) average — residents allocate a much larger share of their income to basic necessities, especially food. This also reflects a lower standard of living, as a substantial portion of income is spent on essential needs rather than services and other opportunities that improve quality of life. From an economic perspective, this is not a positive signal, explains Kārlis Purgailis, Chief Economist at Citadele Bank.
According to the latest Eurostat data, in 2024 spending on food and non-alcoholic beverages in Latvia accounted for 20.1% of total household expenditure — one of the highest shares in the European Union and significantly above the EU average (13.2%). In this respect, Latvia is comparable to countries such as Romania (23.1%) and Bulgaria (20.1%), while in wealthier EU countries the share of food expenditure is much lower — 10.2% in Austria, 9.3% in Luxembourg, and 9.8% in Ireland.
At the same time, the share of spending on housing, water, electricity, gas, and other utilities in Latvia is comparatively lower — 15.8%, while the EU average reaches 23.6%. This is among the lowest levels across member states.
“Latvia is still on the path toward the European Union’s average level of prosperity, and this is reflected in the structure of household consumption — the relatively high share of spending on food and non-alcoholic beverages indicates a greater concentration of expenditure on basic needs,” explains Kārlis Purgailis.
In 2024,
household consumption in Latvia accounted for 58.1% of gross domestic product (GDP), exceeding the EU average (51.8%).
This confirms that domestic consumption and purchasing power play a significant role in Latvia’s economy.
At the same time, Purgailis notes that a high share of food expenditure is typical of countries with lower income levels — as incomes rise, the share of spending on basic needs decreases, while spending on services and higher value-added categories increases.
Although average gross wages in Latvia have grown rapidly in recent years, the pace of growth varies significantly across sectors and regions.
Real net wage growth in Latvia in 2025, taking inflation into account, was 6.3%,
indicating that the situation is gradually improving year by year.
In 2024, household spending in Latvia on recreation, sports, and culture accounted for approximately 7.5% of total expenditure, which corresponds to the EU average. This indicates that, unlike basic necessity categories, spending on leisure in Latvia has already reached the European average.
Overall, in 2024 household consumption in the EU, adjusted for inflation, increased by 1.5% compared to 2023. The fastest growth was recorded in information and communication, as well as transport and recreation, sports, and culture, while spending on alcohol, tobacco, and clothing continued to decline.
At the EU level, the largest share of household budgets is made up of housing costs (23.6%), followed by food (13.2%) and transport (12.7%), with these three categories together accounting for nearly half of total expenditure.
In contrast, Latvia’s expenditure structure differs — the largest share of the budget is spent on food (20.1%), followed by housing costs (15.8%) and transport (12.1%), which is slightly below the EU average.
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