Cost of living: Which are the cheapest and most expensive countries in Europe?

Prices alteration importantly betwixt countries successful Europe. Significant differences beryllium moreover betwixt neighbouring countries specified arsenic Austria and Hungary — aliases Germany and Poland.

But really tin we champion comparison prices crossed Europe? And what are nan astir costly and cheapest countries crossed nan continent?

Price level indices are a bully measurement to thief america understand really costly aliases inexpensive equipment and services are successful each country. They comparison nationalist value levels to nan EU mean and are calculated utilizing Purchasing Power Parities (PPPs).

According to Eurostat, PPPs enactment for illustration an artificial communal currency, arsenic they show really overmuch group tin bargain pinch nan aforesaid magnitude of money crossed countries.

The results are based connected value surveys covering much than 2,000 user equipment and services, conducted crossed 36 European countries.

How are prices compared crossed countries?

There are respective value level indices that comparison nan costs of different equipment and services — specified arsenic food, drink, clothing, hotels, and more. In summation to these individual aliases group indices, location are 2 main indicators that show nan ‘overall’ value level of user equipment and services:

One is existent individual depletion (AIC), which measures each equipment and services really consumed by households. It includes user equipment and services purchased straight by households, arsenic good arsenic services provided by non-profit institutions. The parameter besides includes services provided by nan authorities for individual depletion specified arsenic wellness and acquisition services.

Another parameter is family last depletion expenditure (HFCE), which studies full spending connected individual equipment and services by resident households.

In different words, AIC looks astatine what households usage — including services they don't straight salary for — and HFCE shows what they walk money on.

Eurostat notes that AIC is often utilized successful world comparisons, arsenic it captures much than nan narrower conception of family consumption. Euronews has truthful utilized AIC figures for comparisons, though depletion information is besides included successful nan chart.

Switzerland is 3.9 times arsenic costly arsenic Turkey

As of 2024, retired of 36 countries, Switzerland is nan astir expensive, pinch prices astatine 184% of nan EU mean — 84% higher than nan average.

Turkey is nan cheapest, pinch prices astatine 47% of nan EU average, meaning they are 53% little than nan EU average.

This makes Switzerland 3.9 times arsenic costly arsenic Turkey, revealing nan crisp opposition successful value levels crossed Europe.

A value level supra 100 intends a state is much costly than nan EU average; beneath 100 intends it’s cheaper.

Cheapest and astir costly countries: Bulgaria vs Luxembourg

In nan EU, Luxembourg is nan astir costly country, pinch prices 51% higher than nan EU average.

Bulgaria and Romania are nan cheapest members, astatine 57% of nan EU average.

This intends Luxembourg is astir 2.7 times arsenic costly arsenic Bulgaria and Romania, showing a important but smaller spread compared to nan quality betwixt Switzerland and Turkey.

Ten EU countries person prices supra nan EU average. Denmark (143%) and Ireland (141%) travel Luxembourg arsenic nan astir expensive.

Among nan EU’s 4 largest economies, Germany (109%) and France (108%) are somewhat supra average, while Italy (98%) and Spain (91%) are below.

Geographic patterns successful value levels

Western and Northern European countries thin to person precocious value levels. Switzerland, Iceland, Luxembourg, Denmark, Ireland, Norway, and Finland each show importantly above-average prices. These are mostly high-income countries pinch beardown currencies and higher surviving costs.

All 5 Nordic countries— Denmark, Finland, Sweden, Norway, and Iceland — besides consistently rank adjacent nan top.

In contrast, Central and Eastern European countries mostly person little value levels. Romania, Bulgaria, Hungary, Poland, and nan Baltic States — Latvia, Lithuania, and Estonia — are each beneath nan EU average. These regions typically grounds little labour costs.

Price levels are besides little successful nan EU campaigner countries. They included Turkey, North Macedonia, Albania, Serbia, and Bosnia and Herzegovina.

Why are nan EFTA countries truthful expensive?

Two European Free Trade Association (EFTA) countries — Switzerland and Iceland —rank first and 2nd successful 2024, pinch Norway successful sixth place.

In a 2018 study based connected 2017 figures, Lars Svennebye of nan EFTA Statistical Office explained that precocious workforce productivity and corresponding precocious salaries were cardinal factors down nan precocious value levels successful EFTA countries.

Factors contributing to value disparities

Filippo Pallotti, PhD Candidate successful Economics astatine University College London, told Euronews Business that crossed Europe, nan astir costly countries to unrecorded successful thin to beryllium nan astir productive. “Productivity gains successful tradable sectors (like manufacturing and tech) thrust up wages economy-wide - moreover successful non-tradable sectors specified arsenic hairdressing, hospitality, and existent estate, wherever productivity maturation is slower,” he said.

Comparing nan highest and lowest ends of nan EU, Pallotti pointed retired that hourly labour costs reflector value levels — astir €55 successful Luxembourg, €50 successful Denmark, and conscionable €11 successful Bulgaria. “But erstwhile comparing java astatine €4 successful Copenhagen versus €1 successful Sofia, it’s nan interplay of beardown tradable-sector productivity and nan resulting elevated wages crossed each sectors that chiefly explains nan gap." he added. 

Pallotti besides noted that beyond wages, beyond wages, productivity itself stems from respective cardinal factors: superior intensity, exertion adoption, quality capital, organization quality, infrastructure, and overseas finance - including skilled guidance and talent inflows. Other contributing factors - VAT and indirect taxes, costs of regulation, municipality density, carrier infrastructure, and moreover rate valuations - play roles successful shaping prices. 

Earnings not included successful value comparisons

Individual aliases family incomes are not included successful value level comparisons. “These figures are axenic value comparisons of equipment and services. They do not return nan level of wages, salaries aliases different measures of individual income into account,” Lars Svennebye told Euronews Business.

This intends that personification surviving successful a state pinch a precocious value level whitethorn still beryllium capable to bargain much equipment and services than personification successful a state pinch a little value level, depending connected income.

Price levels alteration importantly crossed different categories. For example, the value level for alcohol and baccy successful nan EU was astir 3 times higher successful Ireland (205%), nan astir costly country, than successful Bulgaria (69%), nan cheapest.