EATING, DRINKING, SMOKING -
comparative price levels in 37 European countries for 2006


The results presented in this article refer to the survey on Food, Beverages and Tobacco carried out in spring 2006 in the 37 participating countries co-ordinated by Eurostat: the 27 EU Member States, the 3 Candidate Countries, Croatia, Former Yugoslav Republic of Macedonia and Turkey, the 3 EFTA countries, Iceland, Norway and Switzerland and the 4 West Balkan countries, Albania, Bosnia-Herzegovina, Montenegro and Serbia. This survey covered a total of approximately 500 comparable products, enabling all countries to price a sufficient number of products representative of their consumption pattern.
What are Price level indices?
The indicators analysed in this article are Price level indices (PLIs), calculated as the ratio between Purchasing Power Parities (PPPs) and exchange rates for each country, in relation to the EU average. These indices provide a comparison of the countries' price levels 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. Price level indices are not intended to rank countries strictly. In fact, they only provide an indication of the comparative order of magnitude of the price level in one country in relation to others, particularly when countries are clustered around a very narrow range of outcomes. It should also be noted that the PLIs in this article have been calculated using 2006 price data, however, estimated expenditure data had to be applied, as expenditure data for 2006 will only become available in autumn this year. The PLIs may therefore change slightly when the preliminary PPP data 2006 are published in December 2007, based on 2006 expenditure data.

Food, Beverages and Tobacco: Price level indices for 2006 -
a comparison between EU, EFTA and EU Candidate Countries

Graph 1: Price level index for food and non-alcoholic beverages, EU27=100

Chart 1: Price level index for food and non-alcoholic beverages, EU27=100

Price level indices for 2006 are presented in Chart 1 and Graph 1 for food and non-alcoholic beverages. The following country groups can be distinguished:
Chart 1 shows that disparities in the price level index between the EU countries are remarkable and lie between 56 (Bulgaria) and 142 (Denmark), alcohol and tobacco excluded.
This means that a comparable basket of food and non-alcoholic beverages in the most expensive EU country, Denmark, costs more than 2.5 times as much as in the least expensive country, Bulgaria. Moreover, the distribution generally tends to reflect a geographical element with eastern EU countries below the EU average.
The three EFTA countries appear to be among the most expensive in the survey group: prices in Iceland (164) and Norway (158) in particular are significantly higher than in Denmark (142). Switzerland has a comparable price level to Denmark.
Finally, the candidate countries, Croatia (89) and Turkey (84), have PLIs approaching those of the EU Member States average while FYROM (56) shows - together with Bulgaria - the lowest PLI of all countries compared.

Chart 2: Price level index for alcoholic beverag

Chart 3: Price level index for tobacco, EU27=100

Chart 2 and Chart 3 show PLIs for alcohol and tobacco. We observe that disparities in the PLIs for these products between the EU countries are remarkable. They lie between 69 (Bulgaria) and 181 (Ireland) for alcohol and between 28 (Latvia) and 205 (United Kingdom) for tobacco. This signifies that smoking costs about 7 times as much in the UK as in Latvia. Looking at the ECP countries outside the EU, price dispersion is even higher, ranging from 65 (FYROM) to 229 (Norway) in the case of alcohol and from 24 (Montenegro) to 227 (Norway) for tobacco. In Turkey, alcohol is also very expensive, showing a PLI of 176, whereas tobacco is relatively cheap with a PLI level of 56.

Table 1: 2006 Comparative price level indices for the main sub-groups of the survey, EU27=100

  Overall survey Food and non-alcoholic beverages Food Bread and cereals Meat Fish Milk, cheese and eggs Oils and fats Fruits and vegetables Other food Non-alcoholic beverages Alcoholic beverages Tobacco
BE 107 110 111 109 123 128 109 111 105 100 101 97 100
BG 56 56 55 41 48 62 82 95 50 67 73 69 51
CZ 68 69 68 61 60 76 80 83 64 83 82 86 52
DK 136 142 139 150 149 138 116 135 129 161 170 128 115
DE 104 105 106 108 118 121 87 88 116 99 103 82 119
EE 72 75 74 70 64 73 79 88 83 83 90 89 41
IE 140 125 124 121 129 123 126 98 130 121 135 181 186
EL 95 98 97 95 91 101 138 118 73 114 118 109 73
ES 87 92 93 112 81 89 96 89 95 100 87 81 64
FR 106 105 107 103 122 106 100 107 108 98 83 91 133
IT 112 115 116 109 118 122 126 113 115 116 109 113 99
CY 106 107 104 108 81 142 139 134 90 127 142 118 95
LV 65 69 68 59 58 71 75 95 73 82 89 92 28
LT 62 64 63 61 50 57 75 91 68 76 79 79 30
LU 104 115 116 119 120 110 112 112 131 106 104 88 84
HU 69 71 70 60 65 75 83 90 65 82 77 77 54
MT 86 83 81 76 69 82 111 98 70 101 108 117 84
NL 90 88 89 89 105 115 78 66 89 80 83 93 103
AT 105 110 111 126 121 111 98 115 107 107 97 81 98
PL 66 67 65 60 52 67 67 83 72 82 84 91 44
PT 87 88 87 95 82 70 105 98 80 109 93 99 76
RO 68 71 70 59 60 85 94 95 70 87 88 88 32
SI 82 86 86 93 83 102 83 106 79 94 88 86 59
SK 65 67 66 56 58 68 75 100 63 87 77 72 51
FI 124 120 119 141 119 111 110 118 124 113 132 170 107
SE 121 119 119 131 133 109 104 118 123 114 118 145 119
UK 128 113 113 103 126 91 115 104 120 107 121 152 205
HR 87 89 87 87 86 84 89 103 78 107 107 113 65
MK 53 56 55 55 53 64 62 80 43 72 67 65 31
TR 85 84 83 70 77 76 117 93 71 107 101 176 56
IS 170 164 163 188 189 112 149 139 154 160 176 226 173
NO 172 158 159 164 182 128 160 156 143 163 159 229 227
CH 129 142 146 142 195 142 126 163 131 129 104 96 102
AL 68 72 70 59 62 85 84 95 61 102 98 96 33
BA 65 71 70 62 73 65 76 86 62 83 89 78 32
ME 67 74 74 66 69 70 77 84 80 87 77 76 24
RS 62 67 67 56 68 82 75 98 59 80 72 73 26

How to read table 1?
The prices underlying this table are average annual national prices for the respective product groups. In the columns, the table provides a direct comparison of the price levels for the respective product group across all 37 participating countries. For example, the PLI for oils and fats is 4% above the EU average in UK and 18% above the EU average in Sweden. Oils and fats are, therefore, in Sweden about 14% more expensive than in the UK (118/104=1.14).
By row, the table refers to the PLIs of different product groups within one country and the interpretation is the following one. All PLIs are expressed relative to the EU average for the respective product groups. For example, for Fish the Portuguese price level is 30% below the EU average and for milk, cheese and eggs 5% above the EU average. In relation to the respective EU averages, therefore, Fish is relatively cheaper in Portugal than milk, cheese and eggs.
Table 1 shows for all participating countries the comparative PLIs for the main sub-groups of products making up the total survey.
Let's look at Luxembourg as an example for cross border comparisons. Luxembourg has borders with Belgium, France and Germany. It is at about the same price level as Belgium and Germany and France, when it comes to food, beverages and tobacco in total. Looking at individual product groups, the picture is different. According to Table 1, Luxembourgers would gain financially by buying bread and cereals in France, fruits and vegetables in Belgium and milk, cheese and eggs in Germany. For non-alcoholic beverages France (83) has clearly a lower price level than Luxembourg (104) and the two other countries. Also for fish France has the lowest price level of the four countries. A remarkable price level difference again exists for tobacco, Luxembourg (84) being the cheapest of the four by some way. In France (133) tobacco products are 58% more expensive than in Luxembourg, in Germany (119) 42% and in Belgium (100) 19%, respectively.
Similarly, we can look at the Czech Republic and Slovakia. At the overall survey level price levels are very close to each other and also in many product groups. At the same time, the respective populations would gain for example by buying oils and fats from the Czech Republic and meat from Slovakia.
Concerning the Netherlands it's worthwhile to notice that at the time of the survey a "price war" was going on between some supermarket chains, resulting in relatively low consumer prices for several items.

Table 2: Coefficient of variation for EUR13, EU15, EU27 and
all 37 survey participants by product groups

  EUR13 EU15 EU27 EU37
Overall survey 15.1 15 25.8 32.2
  Food 12 12.3 24.3 29.9
    Bread and cereals 13 14.7 30.9 37.2
    Meat 15.7 15.6 33.2 41
    Fish 13.8 15 24.8 25.9
    Milk, cheese and eggs 16.2 13.9 20.1 24.1
    Oils and fats 13.9 15 15.2 19.8
    Fruits and vegetables 18.1 16.2 26.4 31.3
    Other food 10.1 15.3 19.2 22.7
  Non-alcoholic beverages 16 20.2 22.7 25.9
  Alcoholic beverages 29.8 28.3 28.1 37.8
  Tobacco 32.1 33.6 50.4 61.1

Table 2 is based on Table 1 and provides a coefficient of variation within the Euro-zone (EUR13), the 15 "old" Member States (EU15), the European Union (EU27) and the group of all 37 countries participating in the survey. The measure used is, for each product group, the coefficient of variation, defined as the standard deviation as percentage of the average PLIs of the respective group of countries. The larger these numbers are the higher are price dispersions in the respective countries and product groups.
The most striking feature of Table 2 is that the price dispersion is greatest for tobacco, in all country groups. Alcoholic beverages also have quite high price dispersion in different country groups. However, large price dispersion is no real surprise, as these products are subject to very different national regulations, excise duties and other taxes. The high price dispersion appears as, for example, Nordic countries and Turkey show PLIs for alcoholic beverages that are significantly higher than those of all other countries (see Table 1).
For tobacco products consumers have to pay in UK and Norway prices more than twice above the level of the EU average. In Latvia and Lithuania, on the other hand, such products are available at about 70 % below the average EU price level (see Table 1).
Price dispersion is naturally greatest within the 37-country group of the survey participants, involving at the same time the high price EFTA and the mostly low price Candidate Countries, relative to the EU.

Table 3: Price convergence for EU27: comparison between
2003 and 2006 by product groups

  EU27
2003 2006 %-change
Food 29.2 24.3 -16.80%
  Bread and cereals 35.2 30.9 -12.10%
  Meat 36.5 33.2 -9.10%
  Fish 27 24.8 -8.10%
  Milk, cheese and eggs 22.2 20.1 -9.40%
  Oils and fats 18.1 15.2 -16.20%
  Fruits and vegetables 32.1 26.4 -17.60%
  Other food 24.9 19.2 -22.90%
Non-alcoholic beverages 25.3 22.7 -10.20%
Alcoholic beverages 32.6 28.1 -13.50%
Tobacco 54.1 50.4 -6.80%

Table 3 shows a comparison of the coefficients of variation between the 2003 and 2006 surveys on food, beverages and tobacco. A decrease of the coefficient of variation is an indication of price convergence for the respective product group.
The most obvious result from the 2003 - 2006 comparison is a general convergence of prices among the 27 Member States. We observe a strong convergence especially for oils and fats, fruits and vegetables, other food and alcoholic beverages.

How are consumer price surveys organised?
For the purposes of the collection of consumer prices, the 37 countries currently participating in the group co-ordinated by Eurostat, are divided in four groups that are organised as follows:
- the Northern group is composed of Belgium, Denmark, Estonia, Finland (Group leader), Iceland, Ireland, Latvia, Lithuania, Netherlands, Norway, Sweden, UK;
- the Central group is composed of Austria (Group leader), Croatia, Czech Republic, Germany, FYROM, Hungary, Luxembourg, Poland, Slovak Republic, Slovenia, Switzerland;
- the Southern group is composed of Bulgaria, Cyprus, France, Greece, Italy, Portugal(Group leader), Romania, Spain, Malta, and Turkey;
- the Western Balkan group, composed of Albania, Bosnia-Herzegovina and Serbia-Montenegro, and logistically attached to the Central Group with Slovenia playing the role of Group leader.
The idea behind this approach is to combine countries in a group, which have similar market structures and consumption pattern due to their similar geographical location. Consequently, each group of countries has group-specific product lists. Specific meetings in all three groups and one so-called "overlap" meeting are organised in order to ensure:
- a harmonised approach to the survey concerned in all participating countries,
- the right balance between comparability of products selected for the survey and their representativity of the expenditure pattern in each participating country,
- and sufficient overlap between the three group product lists for the overall European comparison. A particularly difficult problem in this process is a sufficient overlap between participating countries, as the consumption pattern differs still substantially in many countries.
The four group leaders co-ordinate the establishment of the group product lists, including pre-survey work and validate the prices collected in their respective group. Eurostat is responsible for the overall European co-ordination and PPP calculation.

For practical and cost reasons, the consumer price surveys are organised in a rolling cycle over three years, and they are carried out in the countries' capital cities in a specific survey month. Subsequently, the prices are adjusted to annual average prices, using monthly consumer price indices of the survey year and to national average prices, using spatial adjustment factors. Between survey years, benchmark results are extrapolated using annual average CPI. The prices observed are the market prices consumers actually pay, including all taxes and duties.


Published on 07.06.2007

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