Norway less expensive viewed from abroad
The price level in Norway viewed from abroad has decreased in the last two years. In 2013, the general price level in Norway was 55 per cent higher than the average price level in the 28 EU countries. In 2015, the price level was markedly lower, at “just” 37 per cent above the EU28 level.
In 2015, Norway’s price level for Household Final Consumption expenditure (HFCE) was 37 per cent above the average price level of the 28 EU countries (EU28=100). Switzerland was the most expensive country in the survey, at 63 per cent above EU28. Norway and Denmark had the same price level in 2015, while the price level of Sweden and Finland was about 12 per cent lower. The reason behind the lower Norwegian price level over the last two years is the weakened Norwegian currency against the euro. In 2013, the exchange rate (yearly average) of the Norwegian krone against the euro was NOK 7.81. In 2015, the Norwegian krone was considerably weakened, and the exchange rate (yearly average), was NOK 8.95. This represents a difference of about 15 per cent, which directly affects the Norwegian price level viewed from abroad.
Large differences between north west and south east
There are clear geographical divisions in price levels in European countries. Countries in north west Europe, the Nordic countries, United Kingdom, Ireland, Luxembourg and Switzerland had the highest general price levels. The prices are decidedly lowest in the east and south east, and especially in the Balkans.
Prices in communication, furniture and audiovisual equipment at EU level
Norway is one of Europe’s most expensive countries for goods and services seen as a whole. However, this is not the case for all underlying categories. Figure 1 shows the Norwegian price level for selected groups of goods and services, in relation to the 28 EU countries. We see for example that the Norwegian price level for “Electricity, gas and other fuels” is 25 per cent below the EU28 average.
Electricity prices are subject to major fluctuations from year to year, particularly in Norway with its extensive use of hydroelectric power.
For three groups of goods and services, the Norwegian prices are similar to the EU level:
- Furniture, carpets and other floor coverings
- Audiovisual, photographic and information processing equipment
One product group stands out with a particularly high price level. For “Alcohol and tobacco”, the Norwegian price level is more than double the EU28 average. Norway also had Europe’s second highest price level for food and non-alcoholic drinks in 2015, 59 per cent above the EU28.
Restaurant and hotel services cheapest in the Balkans
Figure 2 shows price levels for “Restaurants and hotels” in different European countries. Albania, The Former Yugoslav Republic of Macedonia, Bulgaria and Serbia also had Europe’s lowest prices for “Restaurant and hotel services” in 2015. Among the Nordic countries, Finland has the lowest price levels for “Restaurant and hotel services”. Restaurant and hotel services are 63 per cent more expensive in Norway than in EU28. Despite the high Norwegian price level there has been a relative decrease in the last two years due to the weakening Norwegian krone against the euro. From 2013 to 2015, there has been a decrease in the Norwegian price level of about 15 per cent, which has made Norway more attractive for foreign visitors.
It is important to keep in mind that a high or low price level could not fully describe the standard of living in different countries. The volume of goods and services bought is not only dependent on the price level, but also the level of income. Price level differences between European countries are fairly stable from year to year. Yearly changes can be due to different inflation rates in the countries, but currency fluctuations are more often the reason.
The price material in the survey includes VAT, possible subsidies, and non-refundable taxes. Temporary discounts and special discounts not available for all customers are not included. The prices are collected in the capital area in each country, and are subsequently adjusted to yearly and national averages.