Key facts
- Consumer prices vary significantly across Europe, with Luxembourg being the most expensive EU country and North Macedonia the cheapest.
- Eurostat's price level indices, based on Actual Individual Consumption (AIC), compare the cost of over 2,000 goods and services against the EU average (100).
- Iceland and Switzerland are the most expensive countries when including non-EU members, while Romania and Turkey are among the cheapest.
- Western and Northern European countries generally exhibit higher price levels compared to Central and Eastern Europe.
- Price differences are primarily driven by disparities in wages, productivity, and local labor costs, with taxes also playing a role.
- Higher price levels in Europe often correlate with higher GDP per capita, indicating a link between wealth and cost of living.
Consumer prices across Europe exhibit a wide disparity, with the cost of a standard shopping basket varying significantly by country. Eurostat's price level indices, which compare the cost of over 2,000 goods and services against the EU average (set at 100), reveal these differences. The broader Actual Individual Consumption (AIC) measure is used for international comparisons, incorporating household spending and publicly funded services like healthcare and education.
Within the European Union, Luxembourg stands out as the most expensive country, with prices 2.5 times higher than in Romania, which has the lowest prices. When EU candidate countries and EFTA members are included, Iceland emerges as the most expensive, and North Macedonia the cheapest, widening the price gap to 3.7 times.
Generally, Western and Northern European nations tend to have higher price levels. Iceland's prices are 83.7% above the EU average, followed by Switzerland (81%), Denmark (40.2%), Ireland (39.6%), and Norway (38.4%). Sweden and Finland also show prices above the EU average, at 28.4% and 26.1% respectively.
Among the EU's largest economies, Germany is the most expensive at 9.1% above the EU average, while Spain is 8.9% cheaper. France is slightly above the EU average, and Italy is just below.
Conversely, many countries in south-eastern Europe are significantly cheaper. North Macedonia's price index is 49.7, Turkey's is 52.2, Bosnia's is 55.7, Romania's is 58.9, and Bulgaria's is 60. These nations are at least 40% cheaper than the EU average.
Experts emphasize that price levels should be considered alongside earnings and purchasing power. Professor Robert Inklaar of the University of Groningen explains that higher wages, driven by productivity, are a primary reason for higher prices in certain regions, particularly for locally consumed goods and services. Factors such as distribution, regulation, and taxes like VAT also contribute to price variations. Professor Rainer Maurer noted a positive correlation between price levels and GDP per capita in Eurozone countries, suggesting that more expensive countries are often wealthier.