Tuesday, July 6, 2010

European Food Prices – Ireland is cheap!!

This release from Eurostat on European food prices caused a minor stir last week when it revealed that Ireland had the second highest food prices in the 27 countries of the EU behind Denmark.

Danish food prices are 39% ahead of the EU average, while in Ireland we pay 29% above the EU average.  In contrast UK prices were 3% below the EU average.  The cheapest food prices were in Poland which are 36% below the EU average.

The media reaction was overwhelmingly negative with many reviving the image of “Rip-off Republic”.
To be honest, this didn’t quiet sit with me.  I cannot say that I feel hard done by for the price I have to pay for food.  I sought some hard evidence to support my anecdotal feeling.  I got it from the United States Department of Agriculture’s Economic Research Service.

A table on their website gives the percent of household final consumption expenditures spent on food, alcoholic beverages, and tobacco that were consumed at home.  The 2007 version of the table is available here with the data for the EU combined with the Eurostat data in my table below.
The table includes only those 22 countries that are common to both data sets. Thus Finland, Luxembourg, Malta, Romania and Cyprus are omitted.  The Price column give the food and non-alcoholic beverages price in relation to the EU average (EU27 = 100).  The Spend column gives the percentage of household expenditure that goes on food.  Also note that the Price data relates to 2009 and the Spend data to 2007 but this is not likely to significantly change the findings.

Country
PricesSpend
Denmark
13910.7
Ireland
1298.2
Austria
11610.3
Belgium
11513.3
Germany
11111.4
France
11013.7
Italy
10814.5
Sweden
10411.7
Greece
10114.5
Netherlands
9810.3
Spain
9713.6
United Kingdom
978.6
Slovenia
9614.9
Portugal
9217.3
Latvia
8519.2
Slovakia
8117.9
Estonia
8016.1
Hungary
7917.1
Czech Republic
7516.2
Lithuania
7423.8
Bulgaria
6820
Poland
6420.6

What do we find?

Yes, Ireland does have the second highest absolute food prices in the EU, but as a percentage of total consumption Ireland has the cheapest food in the EU!!

Food prices may be high in Ireland but only 8.2% of our household consumption expenditure goes on food.  We have the remaining 91.8% of expenditure to buy other things (that we probably couldn’t afford in the first place!).  Poland has the cheapest food in the EU, but food exhausts over 20% of their household expenditure.  They have less than 80% to spend on other stuff.

According to the USDA table, in 2007, on average Irish households spent $2,160 on food and had $24,036 to spend on other things.  In Poland the average household expenditure on food was 36% less at only $1,375.  We can assume that this is as a result of the lower prices rather than lower appetites.  However in Poland there was only $5,300 left to spend on other things.  Ireland has substantially higher food prices, but this is more than offset by our substantially higher incomes.

Give me Ireland and it’s higher food prices any day!

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