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”.

• Irish food prices second highest in Europe (RTE)
• Ireland ranks 2nd in EU for high prices (Irish Examiner)
• We're second most expensive country in EU to buy groceries (Irish Independent)
• Irish prices among highest in EU (Irish Times)

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	Prices	Spend
Denmark	139	10.7
Ireland	129	8.2
Austria	116	10.3
Belgium	115	13.3
Germany	111	11.4
France	110	13.7
Italy	108	14.5
Sweden	104	11.7
Greece	101	14.5
Netherlands	98	10.3
Spain	97	13.6
United Kingdom	97	8.6
Slovenia	96	14.9
Portugal	92	17.3
Latvia	85	19.2
Slovakia	81	17.9
Estonia	80	16.1
Hungary	79	17.1
Czech Republic	75	16.2
Lithuania	74	23.8
Bulgaria	68	20
Poland	64	20.6

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!