Comparative price levels in Europe

Comparative price level indices

Comparative price level indices (PLIs) are calculated for each country as the ratio of the purchasing power parity (PPP) and the exchange rate (XR) in relation to another country (base country) or to the average of a group of countries (e.g. EU-27) and thus enable a comparison of the price levels of the individual countries. If the PLI is greater than 100, the country concerned is more expensive in relative terms than the base country (or group of countries); if the PLI is less than 100, the country in question is relatively “cheaper” than the base country (or group of countries).

PLIs are presented either in the context of the gross domestic product (GDP), one of its sub-aggregates – first of all, final consumption expenditure of private households (HFCE) – or individual product groups. PLIs permit general statements as to how “expensive” or “cheap” one country is in relation to a base country/group of countries, but due to their statistical instability, they should not be used to draw up stringent country rankings. Rather, it is advisable to compile country clusters with comparable price levels.

Price convergence between EU member states

This indicator for a group of countries (e.g. EU-27, EU-25) is defined as the variation coefficient (VC) of the comparative price levels of private consumption expenditure and depicts the convergence of price levels in the EU. The higher the value, the greater is the degree of price variance between the countries. Price convergence/price divergence over time is derived from the time–series of variation coefficients of the PLI. If the VC of the price level indices for the EU decreases (increases) over time, the national price levels in the member states are converging (diverging).

Comparative price levels – data

As a member of the European Union, Austria – through Statistics Austria – participates in the European Comparison Programme (ECP), in which Eurostat collaborates closely with the OECD. As a result, the regular publication of PPP-based data and thus of up-to-date tables concerning comparative price levels is the responsibility of these international organisations. An overview of currently available data is provided below:

1. EUROSTAT
1. Comparative price levels of final consumption by private households including indirect taxes (EU-27 = 100) – Structural indicator (Economic Reform)
2. Price convergence between EU Member States – Structural indicator (Economic Reform)
3. Comparative price levels for food, beverages and tobacco across Europe (PDF, 96KB) in: Statistics in focus 30/2010
2. OECD
1. Comparative Price Levels: monthly updated figures for all 34 OECD countries
3. Statistics Austria
1. Statistisches Jahrbuch 2011 – Kapitel 48, Tab. 48.03: – Gross domestic product per capita to purchasing power parities (PPPs) and exchange rates (XR) in 2008 and 2009 and relative price level indices in 2009 (Austria = 100) (PDF; available in German only)
2. Tourism parities – The Austrian Euro abroad