Which EU Country Has the Highest Cost of Living?

Key Takeaways

• Denmark has the highest cost of living in the EU in 2024. Its price level score stands at 143.1. That means everyday prices are 43% above the EU average.
• Ireland’s price level rose from 98.8 in 1995 to 138.1 in 2024. Multinational technology and pharmaceutical companies built their European operations in Ireland, raising wages and local prices across the economy.
• All EU countries with prices below the EU average are in Southern, Central, or Eastern Europe. Bulgaria records the lowest score at 59.7, or 40% below the EU average.
• Luxembourg ranks third on out-of-pocket household costs but first on the full cost of living including government-funded services (actual individual consumption). Free public transport and government healthcare push the total higher without appearing in household bills.
• Price levels across the EU follow wage levels. In countries where wages are high, the cost of everyday goods and services rises with them.

Price Level Indices Across EU Member States

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Cost of living is the everyday price of being somewhere. Rent, groceries, transport, a meal out. Some countries are simply more expensive than others.

To compare them across the EU, economists use a score called the price level index (PLI). The EU average is set at 100. A score above 100 means that country is more expensive than the EU average. A score below 100 means it is cheaper.

This article uses two versions of that score. “Cost of living” can mean two different things depending on what you count.

The first is household final consumption expenditure (HFCE). This measures what comes directly out of your own pocket: rent, groceries, clothing, transport, a doctor’s appointment, a meal at a restaurant. It is the closest measure to what most people mean by cost of living.

The second is actual individual consumption (AIC). AIC starts with everything in HFCE and adds what the government pays on your behalf, such as public healthcare, state education, and free public transport. You use those services without paying for them directly. AIC counts their full cost regardless of who pays.

HFCE is your personal bill at the end of the month. AIC is the full cost of your lifestyle, including what the government covered for you.

For most EU countries, both scores are close. The gap widens in countries where governments fund a large share of what residents consume.

Denmark Has the Highest Cost of Living in the EU

Denmark ranks first in the EU in 2024 with a price level score of 143.1. Prices in Denmark are 43% above the EU average.

Denmark is the most expensive EU country for clothing, transport services, and restaurants and hotels.

Denmark has some of the highest hourly wages in the EU. When wages are high in industries like finance and manufacturing, wages across all other 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 price level stood at 98.8. That put Ireland just below the EU average. Major multinational technology and pharmaceutical companies built their European operations in Ireland over the following decades. This raised wages and local prices across the economy.

Eastern European Countries Are Cheaper Because Wages Are Lower

All 16 EU countries with prices below the EU average are in Southern, Central, or Eastern Europe. The five cheapest are all 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 logic that makes Denmark expensive makes Bulgaria affordable. Bulgaria’s GDP per capita stood at 66% of the EU average in 2024. GDP per capita measures average economic output per person. Countries that produce less per person pay 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 Cost More When You Count What the Government Pays?

Luxembourg ranks third on HFCE at 132.8. That score covers only what residents pay directly out of their own pocket.

On AIC, the broader measure that includes government-funded services, Luxembourg records 150.7 in 2024. That puts Luxembourg first in the EU, above Denmark (142.8) and Ireland (141.2). The 17.9-point gap between its two scores is the largest among all 27 EU countries.

Free public transport and government-funded healthcare account for most of the difference. Neither appears in household bills. Both cost a lot to run. The price of running them pushes Luxembourg’s AIC score higher. 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 scores are nearly identical:

• Denmark: AIC 142.8, HFCE 143.1
• Ireland: AIC 141.2, HFCE 138.1

In both countries, residents pay for most of what they consume themselves. Government services add little to the overall price comparison.

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.