Wide spread in price levels across Europe
Prices and price indices
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Price level for consumer goods and services2008



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Wide spread in price levels across Europe

Denmark and Norway come out with the highest price levels in a survey recently released by Eurostat.

Price level indices for goods and services 2008. EU27=100

In 2008, the price levels in general were highest in the northern European countries. Southern and central European countries as well as the United Kingdom were average, while countries in the east and south east of Europe had the lowest price levels. For household final consumption expenditure, Denmark and Norway had the highest price levels; 41 and 39 per cent respectively above the average price level of the 27 EU member states (EU27). The former Yugoslav Republic of Macedonia, Bulgaria and Albania had the lowest price levels; around 50 per cent below the average of EU27.

Price level indices for groups of goods and services, selected countries 2008. EU27=100
  Denmark Norway Sweden United
Germany Iceland France Spain Malta Bulgaria Variation coefficients
all 37 countries
Household final consumption expenditure (total index)  141  139  114 99  104  117  111 96 78 51 29
Food and non-alcoholic beverages  147  154  117  104  106  120  104 94 89 67 23
Alcoholic beverages and tobacco  120  217  136  150 97  139  108 75 96 63 39
Clothing  110  125  119 83  107  117 95 99  110 84 13
Footwear  118  137  118 86  103  118 90  106  116 80 13
Electricity, gas and other fuels  169  129  112 90  120 60 95 91 62 59 30
Furniture, carpets and other floor coverings  101  108 96  108 95  109  103  105  117 61 19
Household appliances  134  122  119 84 97  140  103  104  141 84 14
Consumer electronics  121  121  102 86  101  117  106  103  126 96 8
Personal transport equipment  174  153 93 91  101  107 99 98  123 85 17
Transport services  136  157  132  128  111  125  109 89  150 44 34
Communication 86 87 66  100 93 86  117  125 90 75 20
Restaurants and hotels  151  168  126  103  100  135  116 94 84 40 33
Source:  Eurostat.

Financial crisis takes its toll

Some effects of the financial crisis could be seen in the results. A depreciation of a country’s currency against the euro will make the country cheaper in comparison to other countries and this will manifest itself as a decrease in the relative price level for the country. For example, in previous surveys, Iceland was among the most expensive European countries together with Norway. However, after a depreciation of the Icelandic currency of 45 per cent between 2007 and 2008 compared to euro, Iceland now appears with a more moderate price level seen from abroad. An equivalent effect could be seen in the price level indices for the United Kingdom (depreciation of 16 per cent between 2007 and 2008).

Norway most expensive for several product groups

Norway is the most expensive country for six out of 12 product groups in the survey; food and non-alcoholic beverages, alcoholic beverages and tobacco, clothing, footwear, transport services and restaurants and hotels. However, there are exceptions. For the product group communication, the Norwegian price level is 13 per cent below the average of EU27. The price level for furniture, carpets and other floor coverings is also moderate in Norway; only 8 per cent above EU27.

Differences in taxation

A contributing factor to the high Norwegian price levels for some product groups is differences in taxation across countries. This especially concerns the indices for alcoholic beverages and tobacco, as well as restaurants and hotels and personal transport equipment. In such a coherence it is also important to notice that a high price level is often correlated with a high level of income. The indices in this article exclusively show relative differences in price levels between countries, and should not be interpreted as indicators for the purchasing power of the population in different countries.

Highest price dispersion for alcoholic beverages and tobacco

As a part of the survey results, one could also take a closer look at the price dispersion between the countries (variation coefficients). Alcoholic beverages and tobacco is the product group with the highest price dispersion. For this product group, the Norwegian price level as an example is four times as high as in Bulgaria. The large differences are mainly due to differences in taxation between the countries. The product groups transport services and restaurants and hotels also have a high price dispersion. One reason could be that the price level of services tends to correlate with countries’ widely different relative income levels. Furthermore, consumer services are less exposed to global competition than consumer goods.

Consumer electronics, clothing and footwear are the product groups with the lowest price dispersion.

A total of 37 European countries participated in the survey: The 27 EU member states, the three candidate countries (Croatia, the Former Yugoslav Republic of Macedonia and Turkey), three EFTA countries (Norway, Iceland and Switzerland) and four Western Balkan countries (Albania, Bosnia-Herzegovina, Montenegro and Serbia).

The results of the survey are expressed in ”price level indices”, which provide a comparison of a country’s price level with respect to the European Union average; if the price level index is higher than 100, the country concerned is relatively expensive compared to the EU average and vice versa.

Read more in Eurostat’s ”Statistics in Focus” .