Europe's Economic Landscape: Identifying Affordable and Pricy Nations
In Europe, the cost of living varies significantly from country to country, reflecting differences in economic development, market conditions, and productivity. This is evident in a recent survey that compares consumer goods prices across 36 European countries, using Purchasing Power Parities (PPPs) to create price level indices.
At the top of the most expensive list, Switzerland stands out as the most expensive country overall, with prices at 184% of the EU average, making it 3.9 times as expensive as Turkey, the cheapest country in Europe with prices at 47% of the EU average. Denmark follows closely behind, with consumer goods and services prices about 43-45% above the EU average.
Within the European Union (EU), Denmark holds the title for the highest price levels, while Ireland ranks as the second most expensive within the EU, with prices 38% above the EU average. Other EU countries with high price levels include Luxembourg (33% above average), Finland (24%), the Netherlands (16%), and Sweden (15%).
On the other end of the spectrum, Turkey is the cheapest country among the surveyed European countries, with prices at just 47% of the EU average – 53% lower than the average. Within the EU, Bulgaria is the least expensive, with price levels 40-41% below the EU average. Other relatively low-cost countries include Poland (28% below average), Greece (14%), Portugal (13%), and Spain (9% below average).
These price differences impact economic indicators like GDP comparisons, as higher relative prices may inflate nominal economic sizes. Supermarket prices vary across countries, with countries like Germany and France having prices 33-54% higher compared to Greece, while Portugal and Romania have smaller price increases of about 10-14% relative to Greece.
Inflation trends differ by country but do not drastically alter the relative price levels noted above. The results are based on price surveys covering more than 2,000 consumer goods and services, conducted across the 36 European countries.
Two main indicators show the 'overall' price level of consumer goods and services: actual individual consumption (AIC) and household final consumption expenditure (HFCE). These indicators consider what households use, including services they don't directly pay for, as well as what they spend money on.
Notably, all five Nordic countries - Denmark, Finland, Sweden, Norway, and Iceland - consistently rank near the top. Western and Northern European countries tend to have high price levels, while prices vary significantly between countries in Europe. Ten EU countries have prices above the EU average, with Denmark (143%) and Ireland (141%) following Luxembourg as the most expensive.
Geographic patterns in price levels show that Western and Northern European countries tend to have high price levels, including Switzerland, Iceland, Luxembourg, Denmark, Ireland, Norway, and Finland. In contrast, Central and Eastern European countries generally have lower price levels, including Romania, Bulgaria, Hungary, Poland, and the Baltic States.
Price level indices compare the cost of goods and services across countries, based on purchasing power parities. These indices provide valuable insights into the economic landscape of Europe, highlighting significant disparities in consumer costs across the continent.
In the realm of personal-finance, the Nordic countries consistently rank among the highest in terms of consumer goods and services prices, with Denmark, Finland, Sweden, Norway, and Iceland being the most expensive within Europe. On the opposite end of the spectrum, Central and Eastern European countries such as Romania, Bulgaria, Hungary, Poland, and the Baltic States generally have lower price levels. These price differences in the business sector can significantly impact an individual's personal-finance Management.
