Yle price comparison: Finland is no longer a country of expensive food – we compared the prices of Lidl grocery baskets in different EU countries

The comparison tested 30 grocery products sold by Lidl in Finland, Sweden, Estonia, Poland, Germany, Spain, and Greece. It showed that Helsinki was not the clear high-price city many people might expect. Instead, the Helsinki basket cost about the same as baskets in Stockholm and Tallinn. This matters because Finland has long been viewed as an especially expensive food market.

The most striking result concerned Tallinn. Once known as a cheap place to shop, it had become more expensive than Helsinki. Lidl stores in Berlin, Warsaw, and Athens were cheaper than Helsinki, while Barcelona had the cheapest basket. The comparison therefore showed large differences between cities, even within one international chain.

The article links these results to inflation, taxes, wages, transport, competition, and consumer habits. Food remains more expensive in Finland than the European average, but the gap has narrowed. Estonia’s rapid food inflation helped push its prices close to, and in this comparison above, Finland’s level.

The seven-country comparison found meaningful price differences between Lidl stores, even though the same chain sold the products. Barcelona had the cheapest grocery basket. Berlin, Warsaw, and Athens were also cheaper than Helsinki, Stockholm, and Tallinn, which were grouped at roughly the same price level.

The article does not provide the exact euro prices or the precise percentage difference between the most and least expensive baskets. It does, however, establish the ranking clearly. Helsinki was not the most expensive location, and Tallinn was more expensive than Helsinki. The result challenges simple assumptions based only on national reputations.

Several forces explain the spread. Food inflation has been faster in some countries than others. Taxes, wages, transport costs, competition, and local eating habits also affect prices. Product-specific pricing matters too: coffee was unusually cheap in Finland, while olive oil was especially cheap in Greece and Spain. A basket total therefore reflects many local decisions, not just the supermarket brand.

Value-added tax, or VAT, is a consumption tax included in the price paid for goods and services. When food VAT is higher, a larger share of the checkout price goes to tax. When it is lower, the tax portion is smaller, although the final price also depends on the store’s own pricing and other costs.

The article compares Estonia and Finland. Estonia’s food VAT was 24 percent, while Finland’s was 13.5 percent. That difference raises Estonian food prices relative to Finnish prices and helps explain why Tallinn’s grocery basket had moved close to Helsinki’s level. The tax is one factor among several, not the only explanation.

Sweden provides another example. Its government reduced food VAT from 12 percent to six percent until the end of the following year. Despite this lower rate, Swedish prices were still higher than Finnish prices in the comparison. This shows that a tax cut can reduce one cost, but wages, competition, transport, inflation, and consumer habits can still keep groceries expensive.

Recent food inflation reshaped Europe’s price map. Finland has traditionally been known as an expensive country for food, while Tallinn was regarded as a cheaper shopping destination. The comparison found that this old picture no longer worked: Tallinn’s basket was more expensive than Helsinki’s, and Helsinki, Stockholm, and Tallinn were at roughly similar levels.

Estonia’s inflation was especially important. According to Eurostat, food prices there rose by more than 19 percent in 2022, the fastest rate in the euro area. Rapid increases narrowed or reversed earlier price differences. Estonia’s 24 percent food VAT also pushed prices upward compared with Finland’s 13.5 percent rate.

The broader picture is changing rather than fixed. Food remains more expensive in Finland than the European average, but the gap has narrowed in recent years. Eurostat data cited in the article showed food was more expensive than in Finland in Estonia and all the Nordic countries. Inflation can therefore alter familiar ideas about where food is cheapest.

The same supermarket chain can charge different prices because each country creates a different operating environment. Stores face different wages, taxes, transport routes, inflation rates, competitive pressures, and customer expectations. The products may be similar, and sometimes made by the same producer, but the costs and market conditions are not identical.

Finland illustrates this clearly. It is far from Central and Southern European production centres, so goods often travel longer routes and require sea transport. Finnish stores also sell plenty of domestic meat because shoppers strongly value it. Domestic production and transport can cost more than importing meat from a lower-cost producer such as Poland, which is more common in Estonia.

Retailers also adjust prices to local buying habits. Coffee is unusually cheap in Finland because it attracts customers, while olive oil is a cheap draw product in Greece and Spain. These choices can make individual products cheaper even when the overall basket is expensive. Local VAT and food inflation add another layer of difference.

Food prices in Finland reflect both national costs and what consumers choose to buy. Finland lies far from Central and Southern European production centres. Many goods therefore travel longer distances and require sea transport, making logistics more expensive and complicated than direct road routes across mainland Europe.

Wages and taxes also matter. Finnish shop workers earn more than workers in Estonia, increasing retail costs. Estonia’s food VAT is 24 percent, compared with 13.5 percent in Finland, so taxes do not always make Finland more expensive. Consumer preferences add another factor: Finnish shoppers strongly value domestic meat, and Lidl sells a lot of it. In Estonia, shoppers are more willing to buy imported products, including meat from Poland, where production costs are lower.

The result is uneven pricing across food categories. Finnish vegetables can cost up to one-fifth more than the EU average because of transport, greenhouse heating, and lighting. Ready meals and non-alcoholic drinks also raise Finland’s basket price. Local demand ultimately shapes which costs stores absorb and which prices shoppers pay.

Supermarkets do not price every product simply by adding the same margin. They may deliberately discount familiar, popular goods to attract customers. These products are called draw products in the article’s explanation. Shoppers notice the low price, visit the store, and may buy other items whose prices are not unusually low.

Coffee is the Finnish example. It is exceptionally affordable because cheap coffee is an important competitive tool for stores. Cheese and sweets can serve a similar purpose. In southern countries, olive oil plays this role. It is unusually cheap in Greece and Spain because shoppers expect it and retailers use it to draw people into the store.

This explains why one product cannot represent a whole country’s food prices. Finland can have cheap coffee while its vegetables, ready meals, and non-alcoholic drinks raise the total basket cost. Greece and Spain can offer cheap olive oil while other products differ. Retail pricing therefore reflects both costs and strategic competition.