Comparison of price levels in Europe, 1998, preliminary figures

The EFTA countries Norway, Switzerland and Iceland were among the countries in Europe with the highest gross domestic product per capita when corrections are made for national price level differences. This is shown in the preliminary statistics from the 1998 purchasing power survey. The same pattern was also evident in 1994-1997. In particular, gross investments combined with a large trade surplus pushed the Norwegian gross domestic product up compared to other countries. It is therefore natural to point out Norways oil and gas activities as a major contributor to the gross domestic product.

The southern EU countries Spain, Portugal and Greece are found in the group well under the EU average. This group also includes EU member applicants Cyprus and Poland.

Personal consumption

In 1998 personal per capita consumption in Norway, corrected for price level differences, was slightly above the per capita average of EU citizens, while Denmark, Iceland, Luxembourg and Switzerland ranked at the top in Europe. The other Nordic countries lie slightly under the Norwegian level. Personal consumption includes household direct purchases of goods and services, the consumption of non-profit organizations and government consumption consumed individually (e.g. education and health care), but does not include common government consumption such as defence and the judicial system. The expanded consumption term is often used in comparisons between countries in order to take into account national differences in the way different types of consumption are financed.

In the course of 1990-1997 personal consumption grew more in Norway than in the EU. Personal per capita consumption in Norway increased by 24 per cent in the period compared with the average per capita growth in the EU. Compared with the other countries, the growth rate is one of the highest. During the same period, many of the large countries such as Germany, the UK, France and Italy have, relatively speaking, seen negative or very low growth.

Personal consumption of fish, non-alcoholic beverages (soft drinks, coffee and tea), electricity, furniture and household appliances, books and magazines in Norway is higher than in other Nordic countries. One explanation for the relatively high Norwegian consumption of electricity could be the relatively low price level of electricity for Norwegian consumers compared with alternative forms of energy. The Norwegian climate also indicates overall high energy consumption.

The lowest personal consumption per capita is found in the southern EU countries Portugal, Spain and Greece, and the EU member applicants Cyprus and Poland.

Final consumption expenditure of households

If we base such a comparison of consumption for 1998 on a more narrow consumption term final consumption expenditure of households the pictures changes somewhat. Final consumption expenditure consists only of the goods and services bought directly by consumers. The level of Norwegian consumption here was slightly under the EU average, while Luxembourg, Switzerland, Iceland and Belgium had the highest consumption. Compared with the levels in the other Nordic countries, Norway was just behind Denmark, while Sweden and Finland were well under the Norwegian level. In 1997 Belgiums index was 115, Denmarks 96, with Norway at 90. Consumption increased in these countries from 1997 to 1998. For the period 1990-1997, Norwegian consumption rose 16 per cent relative to the EU average. This was relatively high compared with the other countries. Here again the big countries show negative or modest growth in 1990-1997.

The southern EU countries Spain, Greece and Portugal and EU member applicants Cyprus and Poland are among the countries with the lowest per capita consumption in 1998.

The Nordic countries high price level

Compared with European countries, the Nordic countries and Switzerland had the highest price level for the gross domestic product in 1998. In the Nordic countries, the price level in Norway, Sweden and Denmark was about the same level, while Iceland and Finland were lower. This pattern was also seen in 1994-1997. A main reason why Iceland and Finland are somewhat lower than Norway is a somewhat lower price level in personal and collective consumption. In the EU, Portugal, Greece and Spain have the lowest price levels. Consumption price levels are based on capital city prices with some exceptions. Other parts of the price material have national coverage.