Who said things were expensive these days?

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By Anu Nousiainen
     
      Every now and then you hear people grumbling about how expensive everything is these days and how cheap life and the living of it used to be.
      Except it wasn't.
      Life in the 1970s was decidedly costly.
      Just think for a minute how little there was in the homes of that time. There were no microwave ovens, no PCs, videos, tumble dryers, food mixers, and no IKEA.
      Not very many people even had a record player. You have to assume that they would have bought one if they could have afforded it.
      The kitchen of a typical family with kids had a refrigerator that was half the size of today's version.
     
All this has been demonstrated by a comparison study carried out by Ilkka Lehtinen, Head of Development at Statistics Finland.
      Lehtinen put around thirty goods and services into a list and compared their prices in March 1975 and March 2005, and how much or how many of each of these items could be bought with an average monthly salary.
      Among other things, the study indicated that in 2005 a consumer could buy three times the amount of Koskenkorva vodka with a month's wages, relative to the situation 30 years ago. In the case of medium-strength beer, today's drinkers can buy 40% more with their money than in 1975.
     
In 1975, the average Finnish wage-earner had the equivalent of EUR 235 a month left over after taxes and deducations. The aggregate annual expenses of an average family (then 2.9 persons) came to EUR 5,165.
      To deal with these bills required twenty-two months' worth of work, in other words nearly the entire year's labour from two people.
      Fast forward thirty years to 2005, and the average Finnish wage-earner takes home EUR 1,705 after tax each month. The average family (now sharply down, to 2.1 individuals) had annual expenses of EUR 29,000: people bought more cars, made more trips abroad, and filled their homes with more appliances than in 1975.
      All the same, it required only 17 months' net earnings to meet the outgoings.
     
Lehtinen calculated that with the money left in hand after deductions, Finns can now buy five times the amount of granulated sugar they could have afforded in 1975.
      In the case of flour and coffee, the modern-day consumer can buy four times as much with his disposable income, and three times as much meat and eggs, relative to 1975.
      Fruit and vegetables are relatively speaking half the price they were in 1975, and consumers can now buy 150% of the cartons of milk and kilos of potatoes they could afford in 1975.
      The only foodstuffs staple that appears to cost more now than it did in 1975 is bread.
     
Turning to services, the annual net salary in 2005 would have bought three times as many kilowatts of electricity as in 1975. Gasoline, taxi-fares, the TV-licence, and a line of the weekly national lottery are all relatively cheaper than three decades ago.
      Cigarettes, on the other hand, are more costly now than they were.
      But if one is looking for areas where things have got considerably more pricey over the decades, then out-patient and hospital care charges stand out - and, for men, the cost of a haircut, which has effectively more than doubled.
     
Helsingin Sanomat / First published in print 9.4.2006
     
Note: It should be pointed out that comparisons of the relative sums spent on certain commodities in 1975 and in 2005 have changed dramatically through technological advances, for instance the advent of such items as PCs, DVD players, mobile phones, or broadband connections. It can be difficult, therefore, to draw very reliable comparisons of purchasing power. To take one example, in 1975 the average family spent EUR 52 on postal and phone services and equipment. This was the equivalent of just under a week's net earnings. By 2005, the figure for communications had risen to EUR 1,014, or three weeks' earnings. The difference owes more to the astonishing explosion of new services and gadgets, and much less to an actual rise in prices or a decline in consumer purchasing power.


Links:
  Statistics Finland (report in Finnish only)

ANU NOUSIAINEN / Helsingin Sanomat
anu.nousiainen@hs.fi