Finland is the 3rd most expensive country in the EU

Of the countries participating in the Price Comparison Programme of the EU Commission, only Denmark, Norway, Switzerland and Ireland are more expensive than Finland. Finland is the third most expensive country in the EU and the second most expensive country in the euro area. Statistics Finland is responsible for Finland's data in this international price comparison coordinated by Eurostat.

The notion of Finland as an expensive country in terms of private consumption is supported by the international price comparison. Last year Denmark, Norway, Switzerland and Ireland were more expensive than Finland. Differences in price levels between the Nordic countries have grown along with the economic recession. Sweden was 9 per cent more affordable than Finland. A euro now buys significantly more Icelandic and Swedish krona than it did one year ago. The pound has also weakened against the euro, which is visible as a low price level in Great Britain. The situation changed especially much in late 2008.

Price levels vary significantly between the different Member States of the European Union. Many of the new EU countries continued to be the most affordable countries in Europe, as did the Southern European countries Portugal, Greece and Spain. How high the Finnish price level seems is largely determined by the countries or areas Finland is compared to.

It should be remembered that private consumption consists of numerous commodity groups, such as food, alcohol, clothing, housing, transport, etc. Price levels between different commodity groups can vary considerably not only between countries but also within a country.

When speaking of the expensive prices of private consumption, alcoholic beverages, clothing and transport services, among others, are expensive in Finland when compared to most other EU countries. However, the price level of services has a large impact on the overall price level of a country. Price differences between countries are significant in the goods markets but even more significant in the services markets.

Price comparison looks at 2,500 commodities

Price level comparisons examine the prices of similar types of commodities in different countries. As regards private consumption the weight structure of the commodity basket is formed according to households' consumption. As consumption habits differ between countries, the goods and services included in the comparison from each country are selected jointly by national statistical offices, the OECD and Eurostat. All in all the survey looks at the prices of some 2,500 commodities.

The survey price data are collected by product group over a period of three years. The survey data are continuously updated with fresh data and earlier data are revised with currency exchange rates and inflation coefficients. Price comparisons between countries are used to calculate the value relations of currencies, that is, the purchasing power parities.

The price level index is calculated by dividing the PPP with the currency's exchange rate. In a sense the index describes the situation from a traveller's perspective: if a private consumption commodity basket costs EUR 100 in Finland, how much does a corresponding basket cost in some other country. In 2008 a commodity basket that cost EUR 100 in Finland, cost EUR 113 in Denmark and EUR 70 in Portugal.

The main purpose of the international price comparison is, however, to produce purchasing power parities. These purchasing power parities are used to enable real comparisons of GDP volume among the countries participating in the programme.

The results of the international price comparison are presented in more detail in publication no. 50/2009 of Eurostat's Statistics in Focus (SIF) Economy and Finance series. The publication is available online as a pdf file on Eurostat's website.

Source: Eurostat, international price comparison. Statistics Finland
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Last updated 24.7.2009