Which EU Country Has the Highest Cost of Living?

Key Takeaways

• Denmark records the highest household price level in the EU in 2024 at 143.1. It places price levels 43% above the EU average.
• Ireland’s price level rose from 98.8 in 1995 to 138.1 in 2024. The increase is driven by multinational technology and pharmaceutical investment that raised wages across the economy.
• All EU countries below the EU average are in Southern, Central, or Eastern Europe. Bulgaria records the lowest price level at 59.7. That is 40% below the EU average.
• Luxembourg ranks third on household costs (HFCE 132.8) but first on actual individual consumption (AIC 150.7). Government-funded services inflate the full price level without appearing in household bills.
• Price levels across the EU track wage levels. In countries with higher wages, the cost of goods and services rises across all sectors.

Price Level Indices Across EU Member States

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The price level index (PLI) shows how expensive a country is compared to the EU average. The EU average is set at 100. A score above 100 means prices are higher than the EU average. A score below 100 means prices are lower. A higher number always means a more expensive country.

Two PLI measures are used in this article.

• Household final consumption expenditure (HFCE). It covers what residents pay directly out of pocket: groceries, clothing, rent, transport, medical appointments, and restaurant meals.
• Actual individual consumption (AIC). It covers everything in HFCE plus services that governments provide on residents’ behalf. That includes state-funded healthcare, public education, and free public transport. AIC reflects what residents consume in total, regardless of who pays.

For most EU countries, both scores are close. The gap is largest where government-funded services make up a significant share of what people consume.

Denmark Records the Highest Household Final Consumption Price Level in the EU

Denmark ranks first in the EU in 2024 with a price level index of 143.1. That means prices in Denmark are 43% above the EU average.

Denmark ranks first among EU countries for clothing, transport services, and restaurants and hotels in the 2024 consumer price breakdown.

Denmark has some of the highest hourly wages in the EU. When wages are high in finance and manufacturing, wages across all sectors follow. A meal at a restaurant or a haircut costs more in Denmark because the person providing it earns more.

Ireland ranks second at 138.1. In 1995, Ireland’s household price level stood at 98.8. Ireland’s price level rose sharply over the following decades. Major multinational technology and pharmaceutical companies built their European operations in Ireland. This raised wages and local prices across the economy.

Price Levels in Eastern Europe Are Lower Because Wages Are Lower

All 16 EU countries below the EU average are in Southern, Central, or Eastern Europe. The five countries with the lowest household final consumption are in Eastern Europe:

• Croatia: 76.3
• Hungary: 73.5
• Poland: 72.2
• Romania: 63.7
• Bulgaria: 59.7

Bulgaria records the lowest price level in the EU at 59.7, or 40% below the EU average. A basket of household goods that costs €100 in Bulgaria costs €240 in Denmark.

The same mechanism that pushes Denmark above the EU average pulls Bulgaria below it. Bulgaria’s GDP per capita in purchasing power standards stood 34 points below the EU average in 2024. Lower economic output means lower wages across all sectors. Service prices reflect local wages directly. Where wages are lower, the overall price level falls with them.

Why Does Luxembourg Rank Third on Household Costs But First on Actual Individual Consumption?

Luxembourg ranks third on HFCE at 132.8. That figure covers only what residents pay directly.

On AIC, Luxembourg records 150.7 in 2024. Luxembourg ranks first in the EU on this measure, above Denmark (142.8) and Ireland (141.2).  The 17.9-point gap between the two scores is the largest among all 27 EU countries.

Free public transport and government-funded healthcare account for most of the difference in Luxembourg’s HFCE and AIC. Neither appears in household bills. Both are expensive to run and inflate the AIC price level. Luxembourg also records some of the highest hourly labour costs in the EU. High labour costs push prices up across all services, private and public.

Denmark and Ireland show the opposite pattern. Both countries’ HFCE and AIC are nearly identical:

• Denmark: AIC of 142.8 and HFCE of 143.1
• Ireland: AIC of 141.2 and HFCE of 138.1

The EU’s cost-of-living divide is geographic and consistent. High wages push up the price of every service and every purchase. Governments that fund a significant share of what residents consume push the full price level slightly higher.