Estonia has become the most expensive country in the Eastern part of the European Union, Poland being cheapest. As confirmed by personal experience and fresh Eurostat data.
In search of a cheap European country
A journey through Central Europe – Poland, Slovakia, Hungary, Czech Republic, Austria – reveals the cheapness and expensiveness of various countries. With four thousand kilometres of speedways and highways, dozens of stores, gas stations and eateries behind me, Poland has proven to be the cheapest, followed by Hungary, then Slovakia and Czech Republic – both more or less on Estonian level – and finally Austria as the only one definitely more expensive than us.
Afterwards, at a computer at home and comparing the price level indexes via Eurostat, the impression proves to be surprisingly precise. The same sequence – Poland, Hungary, Slovakia, Czech Republic, Estonia, and Austria – is also confirmed by European statisticians. Comparing countries’ price levels and living standards is not easy – as habits, traditions and national peculiarities come into play.
Why, for instance, would a bus ticket from Brno to Prague cost €8.10 (train ride costing the same) and a Pärnu-Tallinn trip €8.40, even though the first distance is 250 kilometres, the latter only 128 km? Why would a 200 g can of instant coffee cost €6.99, next to Vienna opera house, but €8.99 in Selver?
Or why would a room in Radisson Tallinn be €99, as a comparable Radisson room in Budapest, with its two million inhabitants and bursting with tourists, cost €66? In the latter case, it is worth remembering that in Estonia, VAT on establishments providing accommodation is half of that in Hungary; on the one hand pointing to the expensiveness of Tallinn, on the other hand revealing that lower VAT rates equal not lower end-price.
Differing figures may also be found. While coffee and even beer may be cheaper in Vienna than in Tallinn, dark and white bread are two-three times more expensive. In Vienna, mil prices start at €0.95 a litre, Rimi in Tallinn starting at €0.54.
In the capital of Austria, chicken fillet is dearer by half than in Tallinn, stuffed chicken being almost identical in price. Why such differences, who knows...
Estonia’s gasoline prices are the lowest in all of Europe, only in Kosovo and Bosnia it comes cheaper. Even as compared to Poland, Hungary, Slovakia, Czech Republic, Latvia or Lithuania, we pay less for fuel. Where Estonia loses out, however, is in electronics, clothes and footwear – here, these are more expensive than in Central Europe, more expensive than in many Western European states that are richer than us.
According to Eesti Pank economist Kaspar Oja, it may be speculated if clothes and electronics prices are affected by the smallness of our market. Will a smaller market mean less competition? Mr Oja thinks the reason is that out stores order smaller batches, thus probably at higher purchase prices.
Viktoria Trasanov, head of price and wages statistics at Statistical Office agrees that here, clothes and footwear is more expensive. «Even in Luxemburg, you may find it cheaper,» smiled Ms Trasanov. «However, we have cheaper services, as the wages are lower. I Finland, I would avoid hairdressers altogether.»
So: surely Estonia is no cheap country any more. Not really expensive either... as yet. A telling change over the past five years, however, being that we have risen to be one of the moist expensive amongst the so-called New Europe nations.
While, for a long while, Czech Republic used to be the dearest in Central Europe, now Estonia has passed them by. As also confirmed by Eurostat. The Balkans aside, Poland is definitely the cheapest of the region.
Some truck drivers said they favour Polish food, for the very reason of its cheapness – the prices being the lowest.
A lad from Belarus added that they also have the biggest portions. Poland being the cheapest in Europe was also confirmed Eva and Mariusz – a couple I met near Kraków. Being well aware of the price levels, as they live in the car and spend their entire time driving between Poland, Slovakia, Hungary, Czech Republic and Germany.
On our way from Kraków to Slovakia, to the Banská Bystrica encircled by mountains – a picturesque town a little smaller than Tartu – Eva and Mariusz taught me lessons on prices.
Slovakiais dearest, but not as expensive as Germany. Entering Slovakia, we were again in euro zone – out of the zloty zone – and it was easy again to compare prices to Estonia. And, indeed, the levels were approximately the same.
True, a national peculiarity immediately struck the eye. About half of Slovakia’s bread comes in the shape of small croissants called rožky. An average one costing €0.05, in a supermarket, and weighing 40 grams.
Locals purchase bagfuls of these. Even so, they do have the Estonian-type loaves of bread, at about the same prices as here. Those same kinds of croissants are popular in Hungary, costing €0.34 apiece.
So how do you compare this with Estonia, as we have nothing like that on offer? Such differences related to locations and traditions are abundant, pointing to the difficulties of one-on-one comparison.
Yet another lesson is taught us by Hungary, as compared to the neighbouring Czech Republic and the more distant Estonia. Namely: in Hungary, food is cheaper than in the other two countries. Despite fact that, in Czech Republic, VAT on food is lower than in Hungary and – a couple of exceptions aside – than also in Estonia. Even so, the Budapest prices are the lowest.
The same applies to hotel rooms, as mentioned above. In Budapest, decent accommodation may be secured by €8 – clean, quiet, orderly. Not so in Tallinn. Radisson Budapest id cheaper than that of Tallinn; and in the very heart of Budapest a room may be gotten in Kempinski Corvinus – a Hollywood stars’ favourite stop – at a price equal to Hotel Viru.
The difference being that in one you may bump into Johnny Depp, in the latter case navigating the alcohol laden trolleys.
In Estonia, VAT on accommodation establishments is higher by half than in Hungary. What does this prove? First and foremost, that the link between VAT rates and end-prices is not that simple. Looking for links – we might better consider the link between wages and prices.
By prices, starting with the cheapest, the sequence is as follows: Poland, Hungary, Slovakia, Czech Republic, Estonia, and Austria. Looking at medium wages, in Eurostat, the list is exactly the same.
By wages also, Estonia has passed Czech Republic by. It looks like in any country at any given moment, prices are as high as the traders dare to ask and as consumers can pay. Which would not mean that taxes and tax exceptions have no effect at all.
Tobacco and alcohol being the most definite examples; however, with these the production costs are very low and excises make up the bulk of the price – therefore, beer and other sorts of alcohol are more expensive in Estonia than in Austria or Germany, to say nothing about Eastern Europe.
All of the above means not that, in Estonia, living standards would be definitely better or worse than peers in Central Europe. While our prices are a bit higher than in Czech Republic or Slovakia, and a whole lot higher than in Poland and Hungary, we are also ahead in wages. Broadly speaking, life looks and feels the same, probably. Where and Estonian consumer loses out, probably, is in options.
Smallness of market leaves its mark. Here, we do not have the large international retail chains like Tesco, Aldi, Lidl or Carrefour. Compared to these, Selver, Prisma, Maxima and Rimi are midgets. In our department stores, assortment is the poorest. This fall, Estonia will get its first H&M, at last. Hungary and Czech Republic have these in every village.
As Subway came to Tallinn, it was a major event. In Central Europe, Subway, Burger King and KFC – not to mention McDonald’s – adorn every corner.
Ikea, for Tallinn, is way out of sight. Larger assortments allowing for more discounts and sales are a rarity for Estonians. In Warsaw, quite a few people may be fed to the full, for a couple of euros.
In main street Budapest, one may choose a Thai restaurant for a few euros, or Michelin – dozens of times more expensive. Larger markets come with extra options: one may go for the cheap... or treat oneself to the extra special, wallet allowing.