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Rising cost of living in the EU, where do you pay more? How is Albania ranked?

2024-08-20 08:11:24Biznes SHKRUAR NGA REDAKSIA VOX

Rising cost of living in the EU, where do you pay more? How is Albania ranked?

The rising cost of living is the most pressing concern for more than 90% of Europeans. Official data shed light on the reasons for this growing anxiety. Household consumption expenditures show the distribution of resident households' expenditures for meeting their daily needs, such as food, shelter (rent), clothing, energy, health, and transportation.

Housing, water, electricity, gas and other fuels accounted for the largest share of household consumption in the EU in 2022, representing 24.1%. This was followed by food and soft drinks at 13.6%, and transport costs at 12.5%. While the ranking of these categories has remained stable over the past 20 years, their relative shares have changed over time.

Comparing shares from 2002 to 2022, the most significant change has occurred in housing, which has increased from 21.1% to 24.1%. This represents an increase of 3 percentage points (pp) over two decades. This means that, if a family's total expenses were €1,000 in 2002, they would have spent €211 on housing. By 2022, this amount would have increased to €241.

The increase highlights the growing financial burden of essential living costs for European households, which is likely to have been fueled by rising house prices and energy costs over the past two decades. When looking at the percentage change, the percentage of health spending increased by 22%, compared to a 14% increase in housing. However, because the share of housing expenditures is significantly larger, the overall impact of rising housing costs is much greater.

Starting at just over 20% in the early 2000s, the share of household spending on housing and services rose steadily, reaching a peak of nearly 25% in 2013. This period experienced the most significant growth, highlighting increasing costs related to housing and utilities. After a slight decline, the share rose again during the Covid-19 pandemic, reaching a record high of 25.6% in 2020.

The overall increase in spending on housing and utilities over the past two decades shows that these costs have become an increasingly substantial part of household budgets, reflecting wider economic pressures and shifts in living costs across the EU. . In some countries, the growth has been more pronounced, exceeding 5%. Between 2002 and 2022, Ireland saw the most significant growth, with a staggering 7.1% growth, followed by Spain and Italy with growth of 6.3% and 5.4% respectively.

In 10 EU countries, growth exceeded 4%, highlighting a widespread upward trend across the region. Several Eastern European countries, along with Sweden and Great Britain, saw declines in the share of spending on housing. Romania, in particular, suffered the most significant decline, with a decrease of 4.1%, while Bosnia and Herzegovina and Serbia also saw significant declines.

Which European countries spend the most on housing?

The cost of housing as a percentage of total household expenditure varies significantly across Europe. In 2022, Slovakia topped the list, with more than 30% of household spending dedicated to housing. Finland and Denmark followed closely behind, with shares of 29.6% and 29.1% respectively.

These figures show that Northern and Central European countries are facing significant financial pressures related to housing and utilities, most likely driven by higher energy costs or more expensive housing markets. In contrast, Southern and Eastern European countries such as Montenegro, Turkey and Albania have much lower percentages, with Montenegro at only 11.6%, and Turkey and Albania at 12.4% and 12.5% ​​respectively.

Housing costs hit the lowest income families the hardest

A recent OECD report on affordable housing highlights that housing costs can impose a high financial burden on households, especially those on lower incomes. The rate of housing cost overburden is extremely high among Europe's major economies. In 2022, almost half of low-income private renters in the UK (49%) spent more than 40% of their income on rent, followed by 32% in France and 28% in Italy.


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