Prices of food and other everyday goods can differ across European countries to a great extent and the extent of that difference has now been mapped by Eurostat the statistical office of the European Union (EU) in its price level index. The cost of buying a basket of selected food items varies between countries by as much as 70% the analysis shows and those are geographical extremes in a price spectrum that is far more homogenous in the core EU countries. Factors that determine food prices include wages the cost of production tax supply and demand dynamics as well as consumer preferences. In Eurostat’s price comparison index the index value for the EU average for the total selected food basket is 100 while the index level for individual countries is calculated relative to it. Index numbers above 100 indicate that prices for food are higher than in the EU average and those below 100 show the opposite. Europe’s cheapest and most expensive countries for food The country with the lowest prices for the food basket is North Macedonia with an index of 72.9 where it costs on average around €73 to buy it about 27% less than the EU average price. In Romania the cheapest EU member state for food a standard food basket of items costs about €74.6 on average 25% lower than the EU average. The least expensive countries in Europe are therefore concentrated in Southeastern Europe and the Western Balkans: Turkey (€75.7) Bosnia and Herzegovina (€82.5) Montenegro (€82.6) Bulgaria (€87.1) Serbia (€95.7) and Albania (€98.7). All those countries however are characterised not only by the lowest prices but also the fact that food expenses can form a relatively large share of the total consumption basket due to lower average wages and household budgets – as high as over 20% of total consumption. In other words households in those countries are paying proportionally a lot of their income for food. That is the case even though the prices at checkouts are lower. The most expensive country in Europe for food is Switzerland where it costs on average around €161.1 to buy the selected basket about 61% more expensive than in the EU as a whole. Also two other European Free Trade Association (EFTA) members – Iceland (€146.3) and Norway (€130.6) – are in the top ten countries with the highest prices for the food basket outside the EU. Luxembourg is the most expensive country in the EU for the basket with an average price of €125.7 about 25% more expensive than in the EU on average. Other EU member states where prices for the food basket are more than 10% higher than the EU average include Denmark (€119.3) Ireland (€111.9) France (€111.5) Austria (€110.9) and Malta (€110.9). Food prices in Europe’s biggest economies In the four largest EU member states by economic output Italy (€104) and Germany (€102.9) have prices slightly above the EU average while Spain (€94.6) is about 5% lower. Other Central and Eastern European EU countries – Poland the Czech Republic Slovakia and Hungary – also have index levels below or close to the EU average. The drivers behind the differences Experts say that there are various reasons for the relatively high food price dispersion. A major one is the cost of labour – both in wages and its associated parts of the food production and supply chain. Higher average salaries in a country usually mean higher food prices as well since producers processors and retailers in the agri-food chain pass on higher labour costs to their customers. Taxes also play a role especially the application of varying value-added tax (VAT) rates to different food products in different countries – either full reduced or zero rates. Supply chain efficiency production levels and intensity market competition and consumer preferences also play a role. As one example of the latter it is common in many Western and Northern European countries for people to choose more organic or otherwise premium products which is one of the reasons their average food basket price level is higher than in countries where budget or local brand items are more popular. On the other hand there are also several EU member states with lower prices that are also characterised by being above-average food exporters or that have food self-sufficiency levels that are higher than the EU average. The Whole Picture: Affordability In comparison to cross-country price levels lower food prices at the retail level do not always mean that households are better off. For lower income households in lower-priced countries food may still take up a higher share of their total budget. This makes food affordability also a relative concept which raw price indices alone cannot show. After a year of economic recovery from the pandemic but amid high inflation that may persist for the time being food prices will remain a major policy and consumer issue in Europe for the foreseeable future.