Cost of living: Spain vs North Carolina

Spain as one price level

Every comparison on this page treats Spain as a single place, because that is how the price data is published. Eurostat produces purchasing power parities for whole countries, and no official annual series breaks them down by autonomous community or city. Madrid, Barcelona and an inland town in Extremadura therefore carry the same figure here, even though rents for a new tenant in the three are far apart. Read a Spanish figure as a national average, and adjust upwards for Madrid, Barcelona, the Balearic Islands and the Basque Country.

The Canary Islands, Ceuta and Melilla sit outside the European Union's VAT area and apply their own indirect taxes, so their shelf prices follow a different pattern again. A national average does not describe any of them on its own.

When the other side of the comparison is a US state, that side does have its own figure, but it is chained rather than measured. Nobody publishes a price level for Florida in euros. Eurostat publishes one for the United States as a whole, the Bureau of Economic Analysis publishes an index placing each state against the American average, and the state figure is the first scaled by the second. That is the standard construction and it still rests on one assumption more than a comparison between two countries does.

Where Spanish prices tend to sit

Spain's overall price level is below the European Union average and below France and Germany. The gap is widest for eating out, where Spain is among the cheaper countries in western Europe, and narrowest for housing and for food bought in shops, both of which sit close to the average. Where the other side is another European country, the breakdown table can show those components separately, because Eurostat publishes a parity for each of them. Where the United States or the United Kingdom is involved, only the whole basket is comparable: Eurostat publishes their headline parity but not the component detail, so the table stops at the total instead of estimating the rest.

What a Spanish price level leaves out

Health care is the largest item outside the index. In Spain it is provided by the national health system and financed from general taxation, so it is largely absent from the household basket while being a substantial line in an American budget. A price comparison with an American state therefore flatters the American side; the salary comparison for the same two places, which runs both sides through their own payroll rules, is the fuller picture.

The other gap is the rental market in the places people move to. The index reflects the whole housing stock, in a country where most households own their home, so it moves slowly. Someone signing a first lease in central Madrid or Barcelona, or on the islands in the tourist season, faces a price level well above the national figure shown here.

Currency, and why it is not in the answer

The equivalence on this page does not use an exchange rate. A purchasing power parity is a price in each country's own currency for the same basket, so the ratio between two of them is a ratio of prices and does not move when the euro does. Against another euro country the exchange rate is one to one and the whole difference is prices. Against the dollar or the pound, the market rate appears only as a dated contrast line, showing what a bank would give you for the same sum, which is a different and usually much less useful number for anyone deciding where to live.