Rising Cost of Living in Europe: Where Are People Paying the Most for Essentials?

The rising cost of living is a top concern for over 90% of Europeans, with official statistics shedding light on the factors fuelling this growing anxiety.

In 2022, housing, water, electricity, gas, and other fuels made up the largest portion of household spending in the EU, accounting for 24.1% of total consumption, according to Eurostat data.

Food and non-alcoholic beverages followed at 13.6%, with transport costs making up 12.5%.

While these categories have consistently ranked at the top over the last 20 years, their relative importance has shifted.

From 2002 to 2022, housing costs saw the most significant increase, rising from 21.1% to 24.1% of household budgets—a 3 percentage point (pp) jump.

To put this in perspective, if a household's total spending was €1,000 in 2002, €211 would have gone to housing. By 2022, this figure would have risen to €241.

This increase highlights the growing financial strain of essential living costs on European households, likely driven by rising housing prices and energy expenses over the past two decades.

In terms of percentage growth, health expenditures saw a 22% increase, compared to a 14% rise in housing costs.

However, since housing expenses represent a much larger share of household budgets, the overall impact of rising housing costs is far more substantial.

Starting just above 20% in the early 2000s, the share of household spending on housing and utilities steadily increased, peaking at nearly 25% in 2013.

This period marked the most significant growth, reflecting the escalating costs associated with housing and utilities.

After a slight decline, the share surged again during the COVID-19 pandemic, hitting a record high of 25.6% in 2020. This overall rise in housing and utility costs over the past two decades indicates that these expenses have become an increasingly significant part of household budgets, mirroring broader economic pressures and shifts in living costs across the EU.

Ireland Leads in Housing Cost Increases

In some countries, the increase in housing costs has been even more pronounced, exceeding 5%.

Between 2002 and 2022, Ireland experienced the largest rise, with a staggering 7.1% increase, followed by Spain at 6.3% and Italy at 5.4%.

Which European Countries Spend the Most on Housing?

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

 These figures suggest that Northern and Central European countries face considerable financial pressure related to housing and utilities, likely due to higher energy costs or more expensive housing markets.

Conversely, Southern and Eastern European countries like Montenegro, Turkey, and Albania have much lower housing cost shares.

In 2022, Montenegro allocated just 11.6% of household spending to housing, while Turkey and Albania spent 12.4% and 12.5%, respectively.

Lower-Income Households Hit Hardest by Housing Costs

A recent OECD report on affordable housing emphasises that housing costs can impose a significant financial burden on households, especially those with lower incomes.

49% Private tenants spend over 40% of income on rent

In 2022, nearly half of the low-income private tenants in the UK (49%) spent more than 40% of their income on rent, followed by 32% in France and 28% in Italy.

These figures underscore the severe impact of rising housing costs on Europe's most economically vulnerable populations.