Overall price levels In 2019, price levels for consumer goods and services differed widely across Europe. The highest price level among EU Member States was observed in Denmark, 41% above the EU average, while in Bulgaria the price level was 47% below the EU average. An understanding of the differences in price levels is important in the comparison of economic data, such as gross domestic product (GDP), because higher relative prices could make an economy look healthier than it really is. Observing price level differences is also important in the analysis of the development of the EU's single market for goods and services. Figure 1 shows the price level indices (PLIs) for total household final consumption expenditure (HFCE) on goods and services in 2019. Figure 1: Price level index for final household consumption expenditure (HFCE) 2019, (EU-27=100)- Source: Eurostat (prc_ppp_ind)

Table 1 shows the PLIs for four important groups of consumer goods and services (see below for a description of the content of each product group): food and non-alcoholic beverages;

alcoholic beverages and tobacco;

clothing;

footwear. These four groups represent on average 17%, 5%, 4% and 1% of household expenditure, respectively. For reference, the PLIs of total HFCE (those of Figure 1) are also shown. The shaded fields indicate the highest and lowest PLIs per product group among all 37 participating countries. The highest and lowest PLIs among the 27 EU Member States are marked in bold. At the bottom of the table, coefficients of variation are provided for the euro area (EA-19), the pre-2004 EU Member States (EU-15), the current composition of the EU (EU-27) and the group of all 37 countries participating in the programme (all 37). The coefficient of variation is defined as the standard deviation of the PLIs of the respective group of countries as a percentage of their average PLI. The higher the coefficient of variation for a given product group, the higher the price dispersion across countries. Among the EU Member States, Denmark is the most expensive for food and non-alcoholic beverages as well as for clothing and for footwear. Ireland has the highest PLI for alcoholic beverages and tobacco. Among all countries, Switzerland has the highest price level for food and non-alcoholic beverages, Norway for alcoholic beverages and tobacco, while Iceland has the highest price levels for clothing and for footwear. North Macedonia shows the lowest price level of all 37 countries for food and non-alcoholic beverages and for alcoholic beverages and tobacco. Turkey is the least expensive of the participating countries for clothing and for footwear. Among the EU Member States, Romania is the least expensive country for food and non-alcoholic beverages. Bulgaria is the least expensive country for alcoholic beverages and tobacco, for clothing and for footwear. The highest price dispersion is found for alcoholic beverages and tobacco. This is mainly due to large differences in taxation on these products across the 37 countries. Much less dispersion is apparent in the prices of clothing and footwear. Price dispersion is naturally greatest within the 37 country group, which includes both the high price EFTA countries and the (mostly) low price candidate countries. Table 1: Price level index for food, beverages,clothing and footwear, 2019, EU-27=100 - Source: Eurostat (prc_ppp_ind)

Price levels for energy, furniture, household appliances and consumer electronics Table 2 shows the PLIs for another four groups of goods and services (see below for a description of the content of these groups): energy (electricity, gas and other fuels);

furniture and furnishing, carpets and other floor coverings;

household appliances;

consumer electronics. These groups represent on average 5%, 2%, 1% and 1% of household final consumption expenditure, respectively. Price dispersion varies significantly between these four product groups, being most pronounced for electricity, gas and other fuels. Here, Denmark is by far the most expensive and Turkey the least expensive of all 37 participating countries, while the lowest price level for this category in the EU is reported for Hungary. For the other three groups shown in this table the price dispersion is much lower – especially for consumer electronics. Among EU Member States, Luxembourg shows the highest price levels for furniture and furnishings and Bulgaria the lowest. For household appliances Malta is the most expensive country among EU Member States, while France has the highest PLI for consumer electronics. Among all 37 countries, Luxembourg is the most expensive for furniture and furnishings and Iceland for household appliances and consumer electronics. The lowest prices for household appliances and consumer electronics are reported in Poland. Table 2: Price level index for energy, furniture, household appliances and _consumer electronics, 2019, EU-27=100 - Source: Eurostat (prc_ppp_ind)



Price levels for personal transport equipment, transport services, communication, restaurants and hotels Table 3 shows the PLIs for another four groups of goods and services (see below for a description of the content of these groups): personal transport equipment;

transport services;

communication (services and equipment);

restaurants and hotels. These groups represent on average 3%, 3%, 3% and 10% of household final consumption expenditure, respectively. Price dispersion for personal transport equipment is not very significant. Among all 37 countries, only Denmark and Norway stand out with very high PLIs for this category. This is due to high taxation levels on cars in these countries. The lowest price level for this product group was found in Slovakia. Price dispersion is significantly higher among the other three service categories (transport services, communication as well as restaurants and hotels). In general, prices for services tend to show larger differences across countries than prices for goods, due to the higher share of labour input into services and the high dispersion of wages across countries. Concerning transport services, Norway shows the highest PLIs among all countries, while the Netherlands reports the highest prices among EU Member States. The lowest price level among all countries is observed in Turkey, while Bulgaria is the least expensive EU Member State in this category. Among all 37 countries the highest price level for communication can be found in Greece and the lowest in Poland. Finally, Iceland stands out with the most expensive restaurants and hotels, while the lowest prices for these services are observed in North Macedonia. Among the EU Member States, these positions are taken by Denmark and Bulgaria respectively.

Table 3: Price level index for personal transport equipment, transport services, communication and restaurants & hotels, 2019, EU-27=100 - Source: Eurostat (prc_ppp_ind)

Price convergence Figure 2 shows the development over time of the coefficients of variation of the PLI for total household final consumption expenditure for four country groups. A decrease of the coefficients of variation is an indication of price convergence. Between 2009 and 2019, all four country groups exhibit slight increases in this indicator. For all country groups except EA-19 this can be partly explained by the impact of exchange rate fluctuations.

Source: Eurostat Figure 2: Price convergence - coefficients of variation of price level indices of final household consumption expenditure, 2009-2019Source: Eurostat (prc_ppp_conv)

Data sources The full methodology used in the Eurostat-OECD Purchasing Power Parities (PPP) programme is described in the 'Eurostat-OECD Methodological Manual on Purchasing Power Parities' available free of charge from the Eurostat website. The PPP concept In their simplest form, PPPs are price relatives that show the ratio of the prices in national currencies of the same good or service in different countries. For example, if the price of a hamburger in France is EUR 2.84 and in the United Kingdom it is GBP 2.20, the PPP for hamburgers between France and the United Kingdom is EUR 2.84 to GBP 2.20, or EUR 1.29 to the pound. In other words, for every pound spent on hamburgers in the United Kingdom, EUR 1.29 would have to be spent in France in order to obtain the same quantity and quality – or volume – of hamburgers. Published PPPs, usually refer to product groups or broad aggregates like gross domestic product (GDP) rather than to individual products. However, these aggregate PPPs are based on sample surveys of individual goods and services. Price level indices The results of these surveys are expressed in the form of price level indices (PLIs). PLIs are the ratios of PPPs to exchange rates. They provide a comparison of countries' price levels relative 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, while if the price level index is lower than 100, then the country is relatively inexpensive compared to the EU average. The EU average is calculated as the weighted average of the national PLIs, weighted with expenditures from national accounts. Price level indices are not intended to rank countries strictly. In fact, they only provide an indication of the 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. The degree of uncertainty associated with the basic price data and the methods used for compiling PPPs, may affect in such a case the minor differences between the PLIs and result in differences in ranking which are not statistically or economically significant. Organisation Within the framework of the Eurostat-OECD Purchasing Power Parities (PPP) programme, surveys on prices of household goods and services are carried out cyclically by the National Statistical Institutes (NSIs) of 37 countries. Each survey cycle comprises six surveys, each related to a particular group of household consumption products. As two surveys are carried out per year, the whole survey cycle takes three years to complete, before the next cycle starts. The PLIs in this article are thus based on price data collected in 2017, 2018 and 2019. The prices collected in 2017 and 2018 have been updated to 2019 using detailed consumer price indices. The PLIs are based on annual national average prices for in total more than 2000 goods and services. The expenditure shares are based on national accounts data for 2019 and represent the average over all participating countries. The national accounts data are also used as weights in the aggregation of detailed PLIs to aggregate PLIs such as for household final consumption expenditure. Definition of the product groups The product groups discussed in this article can be broadly described as follows. Food and non-alcoholic beverages : bread and cereals; meat; fish; milk; cheese; eggs; oils and fats; fruits; vegetables; potatoes; other food; non-alcoholic beverages.

: bread and cereals; meat; fish; milk; cheese; eggs; oils and fats; fruits; vegetables; potatoes; other food; non-alcoholic beverages. Alcoholic beverages and tobacco : spirits; wine; beer; tobacco.

: spirits; wine; beer; tobacco. Clothing : clothing materials; men's, women's, children’s and infant’s clothing; other articles of clothing and clothing accessories (excludes cleaning, repair and hire of clothing).

: clothing materials; men's, women's, children’s and infant’s clothing; other articles of clothing and clothing accessories (excludes cleaning, repair and hire of clothing). Footwear : men's, women's, children's and infants' footwear (excludes repair and hire of footwear).

: men's, women's, children's and infants' footwear (excludes repair and hire of footwear). Electricity, gas and other fuels : electricity; gas; liquid fuels; solid fuels; and heat energy (all for domestic use).

: electricity; gas; liquid fuels; solid fuels; and heat energy (all for domestic use). Furniture and furnishing, carpets and other floor coverings : kitchen furniture; bedroom furniture; living-room and dining-room furniture; other furniture and furnishings; carpets and other floor coverings (excludes repair of furniture, furnishings and floor coverings).

: kitchen furniture; bedroom furniture; living-room and dining-room furniture; other furniture and furnishings; carpets and other floor coverings (excludes repair of furniture, furnishings and floor coverings). Household appliances : refrigerators and freezers; washing machines; dishwashers; cookers; microwave ovens; vacuum cleaners; coffee makers; kettles; toasters, etc. (excludes repair of household appliances).

: refrigerators and freezers; washing machines; dishwashers; cookers; microwave ovens; vacuum cleaners; coffee makers; kettles; toasters, etc. (excludes repair of household appliances). Consumer electronics : televisions; DVD players; receivers; audio systems; MP3 players; cameras; desktop and laptop computers; monitors; printers; scanners; software; music CDs; movie DVDs; empty CDs and DVDs etc (excludes repair of such equipment).

: televisions; DVD players; receivers; audio systems; MP3 players; cameras; desktop and laptop computers; monitors; printers; scanners; software; music CDs; movie DVDs; empty CDs and DVDs etc (excludes repair of such equipment). Personal transport equipment : motor cars; motor cycles and bicycles (excludes maintenance and repair of personal transport equipment, spare parts and fuels).

: motor cars; motor cycles and bicycles (excludes maintenance and repair of personal transport equipment, spare parts and fuels). Transport services : Passenger transport by railway, by road, by air, by sea and inland waterway and other purchased transport services (e.g. left luggage services, removal services).

: Passenger transport by railway, by road, by air, by sea and inland waterway and other purchased transport services (e.g. left luggage services, removal services). Communication : postal services; telephone and telefax equipment; telephone and telefax services.

: postal services; telephone and telefax equipment; telephone and telefax services. Restaurants and hotels: restaurants; cafés; pubs; bars; canteens; hotels; youth hostels etc.