The impact of unexpected inflationary shock in 2022 and 2023 on the welfare of families: The case of Slovakia

Source: Authors’ calculations. Note: A table from Sgaravatti et al. (2021) was adjusted so that it considers measures concerning households only. The fiscal effects were adjusted using the most available and accurate information.

Source: Authors’ calculation based on the forecasts of the Macroeconomic Forecasting Committee.

Source: Authors’ calculation based on the forecasts of the Macroeconomic Forecasting Committee.

Source: Authors’ calculation based on the forecasts of the Macroeconomic Forecasting Committee.

Value in 2021 is fixed the same for both forecasts.

Source: Authors’ calculation based on the forecasts of the Macroeconomic Forecasting Committee.

Value in 2021 is fixed the same for both forecasts.

Note: One-off income support to vulnerable households has been legislatively secured by two Government Regulations and presented to public as anti-inflation packages. The first one, adopted in June 2022, authorized one-off payment of 100 euros. Support was paid automatically by increasing the social transfers like child benefit, material need benefit or foster care allowance in June. In addition, certain vulnerable groups with no regular social transfers were identified – for example seniors over 62 years without pensions or personal assistants of disabled persons not receiving cash benefit and for these groups an income support of 100 euros conditional on submitting a request was established.

The second anti-inflation package, adopted in October 2022, provided one-off payment 100 euros to those beneficiaries of social transfers and vulnerable groups that did not receive support in June 2022.

Total of 100€ was paid, but regular benefit amount was 25.88€. So, the anti-inflation support in this case is considered as 100-25.88=74.12€.

Total of 100€ was paid, but regular benefit amount was 30€. So, the anti-inflation support in this case is considered as 100-30=70€.

Note: Income support directed to families with children has been realized through an increase of the child benefit and child tax credit. Initially, the increase of children-related benefits, announced by policy makers, was proposed as to cope with the income poverty of families with children. Later, these measures started to be officially interpreted as government interventions to cushion the effects of high inflation. Child benefit and child tax credit were substantially increased from July 1st, 2022, and in the second step from January 2023. The child benefit is a flat payment per dependent child to parents and the increase is adopted in the legislation as permanent. Working parents with dependent children are eligible to receive child tax credit (only one of the parents can apply). Child tax credit has also been increased from July 2022 and in the second round from January 2023 but, as opposed to the child benefit, this measure is valid temporarily until the end of 2024.

Note: Income support directed to pensioners has been introduced in 2022 through two measures considered in our evaluation framework. Pensioners receiving old-age, early retirement, disability, or survivors’ pensions got the one-off payment in December 2022, the so-called 14th pension (Since pensioners receive the 13th pension regularly every year, this payment is not considered as a special one-off to cope with high inflation.). Based on the amount of the pension, the one-off support, ranging from 35 to 210 euros, has been paid (pensioners with lowest pensions got the highest support). The average payment per pensioner was 143 euros and the total cost of this support reached 208 mil. euros. In addition, in January 2022 senior citizens over 60 years, who got vaccinated against COVID-19 disease, got the so called “vaccination bonus”. The bonus ranged from 100 to 300 euros, was granted by an automatic procedure, and the total expenses reached 278 mil. euros. In 2023 the parliament changed the valorisation rules for all types of pensions. As a result of new legislation and due to the high inflation rate at the beginning of 2023, advance indexation of pensions occurred in July 2023. All types of pensions were increased by 10.6% and the estimated costs of advance indexation are at 522 mil. euros in 2023.

Note: We do not recalibrate the weights of the databases, only uprating of monetary variables is changed according to respective forecast. We do not assume changes in the statuses (employed/unemployed/inactive).