Quote from Alex bobby on July 7, 2025, 5:15 AM

Cost of Living in Europe: Which Countries Are the Cheapest and Most Expensive in 2024?

The cost of living varies dramatically across Europe, and comparing prices from country to country reveals striking differences—even between neighbour’s. From the pricey streets of Zurich to the budget-friendly cafes of Sofia, understanding which countries are more expensive (or cheaper) can offer important insight for travellers, expatriates, and policymakers alike.

To compare living costs fairly, economists use Price Level Indices (PLIs), calculated based on Purchasing Power Parities (PPPs). These indices measure how much goods and services cost in each country relative to the EU average (which is set at 100%). A PLI above 100 indicates a country is more expensive than the EU average; below 100 means it’s cheaper.

How Are Price Levels Compared?

Two key indicators are used to assess overall living costs:

• Actual Individual Consumption (AIC): This includes goods and services consumed by households, whether paid for out-of-pocket or provided by the state (like education or healthcare).
• Household Final Consumption Expenditure (HFCE): This focuses on what households actually spend their money on, excluding publicly provided services.

Because AIC includes services that people benefit from even if they don’t directly pay for them, it’s widely regarded as a better measure of real cost of living across countries—and forms the basis for most international comparisons, including this one.

Switzerland vs. Turkey: A 3.9x Gap in Living Costs

According to 2024 Eurostat data, Switzerland tops the list as the most expensive country in Europe, with prices 184% of the EU average. In contrast, Turkey is the cheapest, at just 47% of the EU average. That makes Switzerland nearly four times as expensive as Turkey.

This extreme contrast showcases the disparities not only in prices but in economic environments, currencies, and productivity levels across the continent.

Inside the EU: Bulgaria vs. Luxembourg

Among EU member states, Luxembourg is the most expensive, at 151% of the EU average. Bulgaria and Romania, at 57%, are the cheapest EU countries, making Luxembourg about 2.7 times more expensive.

Ten EU countries have prices above the EU average. After Luxembourg come:

• Denmark (143%)
• Ireland (141%)
• Finland, Sweden, and France also rank high.

Among the EU’s four largest economies:

• Germany (109%) and France (108%) are slightly above average,
• Italy (98%) and Spain (91%) are below.

Regional Price Patterns Across Europe

The data highlights clear regional trends:

Western and Northern Europe: High Cost, High Income

Countries such as Switzerland, Iceland, Norway, Luxembourg, Denmark, and Ireland consistently top the charts. These are high-income economies with robust social services, strong currencies, and high consumer purchasing power. All Nordic countries (Denmark, Sweden, Norway, Finland, and Iceland) also report some of the highest prices in Europe.

Central, Eastern, and Southeastern Europe: Lower Prices

By contrast, Central and Eastern European nations like Poland, Hungary, Romania, Bulgaria, and the Baltic States (Estonia, Latvia, and Lithuania) are significantly cheaper. Lower labor costs and less price inflation are key factors in keeping the cost of living down in these regions.

EU candidate countries such as Serbia, Albania, North Macedonia, Bosnia and Herzegovina, and Turkey also rank among the cheapest, though wages and public services vary widely.

Why Are EFTA Countries So Expensive?

The European Free Trade Association (EFTA) countries — Switzerland, Iceland, and Norway — rank among the most expensive in Europe. According to Lars Svennebye from the EFTA Statistical Office, these high prices are driven largely by high productivity and wages. In essence, a more productive workforce in sectors like technology and finance translates into higher income, which raises prices across all sectors, including lower-productivity ones like hospitality and retail.

For example, a cup of coffee in Copenhagen might cost €4, while the same cup costs only €1 in Sofia — a direct result of higher wages and operating costs in Northern Europe.

Factors Behind Price Disparities

Filippo Pallotti, a PhD Candidate in Economics at University College London, explains that productivity in tradable sectors—such as manufacturing and technology—leads to economy-wide wage increases, including in non-tradable sectors like real estate and personal services.

Other factors include:

• Capital intensity and tech adoption
• Skilled labor availability
• Institutional quality and infrastructure
• Foreign investment
• Tax regimes, VAT, and regulatory costs
• Currency strength

All these elements shape how much goods and services cost in different countries.

Income Isn’t Included

It’s important to note that these price level comparisons do not reflect income levels. A country might be expensive, but if its residents earn more, they may still afford a high standard of living. Conversely, a low-cost country with low wages might not offer better purchasing power. As Svennebye puts it, these figures “are pure price comparisons.”

Category Breakdown: Alcohol and Tobacco

Price levels vary sharply across product categories. For instance, Ireland has the highest prices for alcohol and tobacco (205% of EU average), while Bulgaria has the lowest (69%). This variation is influenced by national tax policies, public health regulations, and demand.

Final Thoughts

Europe’s cost of living is far from uniform. Whether you're planning a relocation, investing, or just curious about economic disparities across the continent, understanding price level indices offers key insights. From the alpine luxury of Switzerland to the affordability of Turkey or Bulgaria, living costs reflect a complex mix of wages, productivity, policy, and infrastructure. Just remember: what you earn matters just as much as what you spend.

Conclusion

The cost of living across Europe in 2024 reveals deep economic contrasts shaped by productivity, wages, and broader economic structures. While Western and Northern European countries like Switzerland, Luxembourg, and Denmark remain the most expensive, Central and Eastern European nations—including Bulgaria, Romania, and Hungary—offer significantly lower price levels. However, these figures don’t account for income, meaning a higher cost of living may still be manageable in wealthier countries due to stronger purchasing power.

Ultimately, understanding these disparities through price level indices helps paint a clearer picture of the real value of money across Europe. Whether you're traveling, relocating, or analysing economic trends, it's essential to look beyond price tags and consider the broader economic context that shapes them.

Meta Description:
Switzerland, Luxembourg, and Denmark top the list of Europe’s most expensive countries in 2024, while Turkey, Bulgaria, and Romania remain the cheapest. See how prices compare across the continent based on purchasing power parity.