Consumer prices across Europe: Which countries are the most expensive and cheapest?
From Iceland to North Macedonia, consumer prices vary dramatically across Europe. New Eurostat data shows where everyday goods and services cost the most — and why prices alone do not tell the full story.
The same shopping basket can cost almost four times as much depending on where you are in Europe. But which countries are the most expensive, and how can they be compared fairly?
Eurostat's price level indices provide the answer. They compare the cost of consumer goods and services in each country with the EU average.
In simple terms, if the same basket of goods and services costs €100 on average across the EU, how much would that basket cost in each country?
To make the comparison representative, Eurostat bases the indices on annual national average prices for more than 2,000 goods and services.
There are two ways of measuring prices. One looks only at what households spend directly, while the other also includes publicly funded services such as healthcare and education.
This article uses the broader measure, known as Actual Individual Consumption (AIC), which Eurostat says is better suited to international comparisons. The chart also includes the household spending measure (HFCE).
A price level of 100 matches the EU average. A score above 100 means a country is more expensive, while one below 100 means it is cheaper.
These figures compare prices only. They do not take income levels into account, meaning a more expensive country is not necessarily less affordable for its residents.
So, which countries are the most expensive and the cheapest?
Within the EU, the gap is striking. Luxembourg tops the list, while Romania has the lowest prices. Consumer prices in Luxembourg are 2.5 times higher than in Romania.
When EU candidate countries and EFTA members are included, Iceland becomes the most expensive country and North Macedonia the cheapest, widening the gap to 3.7 times.
Broadly speaking, Western and Northern Europe tend to have higher price levels, while Central and Eastern Europe remain cheaper.
Prices and earnings tell the full story
Iceland is 83.7% more expensive than the EU average, and Switzerland 81%.
“The figures should always be read together with earnings. What matters for living standards is not whether prices are high but what a local wage buys locally — purchasing power, not the price tag alone,” Professor Robert Inklaar of the University of Groningen told Euronews Business.
For example, he noted that Switzerland looks expensive, but Swiss wages are high enough that purchasing power there is among Europe's strongest; the same price level on a much lower wage would feel very different.
Denmark (40.2%), Ireland (39.6%) and Norway (38.4%) are also among the most expensive countries in Europe, around 40% above the EU average.
Sweden and Finland follow them, but their indices are comparatively lower. Prices are 28.4% higher in Sweden and 26.1% higher in Finland than the EU average.
In the Netherlands, a consumer pays €120.4, in Austria €119, and in Belgium €118.1 for the same basket of goods and services, which costs €100 on average in the EU.
How Europe's largest economies rank
Among the EU's four largest economies, Germany is the most expensive, with prices 9.1% higher than the EU average, while Spain is 8.9% cheaper. That means a person would pay €18 more in Germany than in Spain for the same basket.
France (106.4) is just above the EU average, and Italy (98) is just below.
At the other end of the ranking, prices are significantly lower across much of south-eastern Europe.
In North Macedonia, a €100 basket on the EU average would cost just €49.7, less than half.
It would also cost €52.2 in Turkey, followed by Bosnia (€55.7), Romania (€58.9) and Bulgaria (€60). These countries are at least 40% cheaper than the EU.
Montenegro (61), Serbia (62.5), Albania (65.7), Poland (71.1) and Hungary (71.6) are also among the cheaper countries, with prices at least 25% below the EU average.
Countries that are also cheaper than the EU average include Croatia (76.3), Slovakia (81.4), Lithuania (81.4), Czechia (82), Greece (84) and Portugal (85.3).
What drives the differences in price levels?
"The biggest single reason prices differ across Europe is that wages differ, and wages are tied to productivity," Robert Inklaar told Euronews Business.
"Where workers are more productive they earn more, and those higher wages feed straight into the price of everything that has to be produced and consumed locally — a restaurant meal, a haircut, a dentist visit, rent, childcare. None of these can be imported, so their price simply tracks local labour costs."
Inklaar points out that it would be a mistake to think this applies only to services. He notes that even goods that look fully tradable — such as the food on a supermarket shelf or a piece of clothing — carry a large local component: the shop, the staff, transport, and the rent on the premises. So local wages are baked into goods prices too, just less heavily than for services.
Wages are not the only factor.
He also said that distance, distribution, regulation and the border itself all add to the cost, so identical products do not end up at identical prices everywhere. Differences in VAT and other consumption taxes add a further wedge on top.
“A fuller comparison, therefore, pairs the price level with wages or (disposable) income, ideally in purchasing-power terms, while keeping exchange-rate and tax differences in mind,” he said.
Professor Rainer Maurer, retired professor at Pforzheim University, emphasised that the price levels of the European Monetary Union member states show a clear positive correlation with GDP per capita.
In other words, Europe's most expensive countries also tend to be its wealthiest. High prices often go hand in hand with higher incomes, which is why economists say price levels should always be considered alongside purchasing power.
