These are the main findings of the most recent survey on food, beverages and tobacco, carried out in 2009 within the Eurostat-OECD Purchasing Power Parities (PPP) Programme. The survey covered a total of approximately 500 comparable products, enabling all countries to price a sufficient number of products representative of their consumption pattern. A total of 37 European countries participated in the survey: 27 Member States; 3 candidate countries (Croatia, FYR of Macedonia, Turkey); 3 EFTA members (Iceland, Norway, Switzerland) and 4 Western Balkan countries (Albania, Bosnia and Herzegovina, Montenegro and Serbia)

Final expenditure on GDP shares are based on national accounts preliminary data for 2009 and represent the average over all 37 participating countries. The national accounts data are also used as weights in the aggregation of the results expressed in price level indices (PLIs) which provide a comparison of countries’ price levels with respect to the EU27 average. In other words if the price level index is higher than 100, the country concerned is relatively expensive compared to the EU27 average and vice versa, if the PLI is below 100% this means that prices in the respective country are cheaper compared to the EU27 average price level.

The most important groups in total household final consumption expenditure (HFCE) are foods, comprising 16%, non-alcoholic beverages (2%) alcoholic beverages (4%) and tobacco (3%).

PLIs by commodity group for all 37 countries are represented in Table 1. in comparison with the average price levels for total HFCE. The price level of HFCE in 14 European countries is above the EU27 average. Those are 3 EFTA countries and 11 Member States.

The higher price level of total HFCE, as well as for non-alcoholic beverages, among all 37 European countries was observed in Denmark. Compared to the other Member States in Denmark food is most expensive, while Finland is the leader with most expensive alcoholic beverages and the price level of tobacco is the highest in Ireland and UK. Non-alcoholic beverages are cheapest in Romania; tobacco prices are lowest in Bulgaria. The Former Yugoslav Republic of Macedonia is the least expensive country of all 37 in all product groups.

Four groups: “bread and cereals”, “meet”, “fish” and “milk, cheese, eggs” represent on average 17%, 25%, 3% and 19% of household expenditure on food. Amongst 37 countries Switzerland shows the highest price levels for meat and fish, Norway has the highest prices for dairy products and Denmark is leader with a highest price level for bread and cereals. Amongst 27 EU countries the most expensive milk, cheese and eggs are observed in Cyprus and Ireland; while Belgium is most expensive for fish. The cheapest bread and cereals are seen in Bulgaria, while the price level of meet and dairy products is the lowest in Poland and that of fish – in Lithuania.

Another 3 sub-groups of food products: oils and fats, fruits and vegetables, other food products comprise 5%, 12% and 11% of household expenditures on food respectively. For the first sub-group the highest price level is observed in Switzerland (168), Norway (155) and Denmark (140). In Bulgaria the PLI for oils and fats is 89% of the EU27 average, followed by Turkey, Serbia, Czech Republic, Bosnia and Herzegovina, Romania and FYROM. As regards fruits and vegetables the Bulgarian PLI is quite low in EU27; only in Romania, Turkey and in most of the Western |Balkan countries these products have lower price levels.

At the bottom of the table variation coefficients are presented for the euro area (EA16), the 15 “old” EU Member States (EU15), the European Union (EU27) and the group of all 37 countries participating in the program – for the total HFCE and by product group. The variation coefficient is defined as standard deviation of the respective country group PLIs as percentage of their average PLI. The higher the variation coefficient, the higher is the price dispersion in the respective product group.

Price dispersion is most pronounced within the 37 country group, including both the high price level EFTA countries and the mostly low price Western Balkan countries. The highest price dispersion is found for tobacco products mainly due to large differences in excise taxation on these products across the 37 countries. Price differentiation is much less in the euro area than in the EU27. Concerning food the price dispersion is rather high in EU as a whole and for the group of 37 surveyed countries as well, for meat, bread and cereals, fruits and vegetables. The lowest price dispersion is seen for other food products and for oils and fats.

Comparison of the price dispersion by main food groups, beverages and tobacco observed on the basis of the consumer price surveys conducted during 2003, 2006 and 2009 ECP exercise shows that prices have converged within the EU. A reduction of price differences is of similar magnitude for almost all categories except for non-alcoholic beverages, where price dispersion initially is lower.