The price of a basket of 250 mostly branded goods was 5.3 per cent greater in London than the eurozone average, while in Warsaw it was 22 per cent cheaper than the average, according to the study of seven European cities by Dresdner Kleinwort Wasserstein, a global investment banking firm.
Paris came second, 1.3 per cent above the eurozone average, followed by Frankfurt (+0.8 per cent) and Brussels (-0.4 per cent), according to details of the study published today in Financial Times.
But the study found that convergence between prices in cities in the Eurozone has become greater in the past year. The gap between Paris, the most expensive Eurozone city, and Madrid, the least expensive was only 3.8 per cent.
A year ago, when the bank did the same exercise, the gap was 7.4 per cent. Other six cities listed cheaper than the Eurozone are Amsterdam (-0.6 per cent), Rome (-1.7 per cent), Madrid (-2.5 per cent), Prague (-17.7 per cent) and Warsaw (-21.7 percent).
Greater transparency leading to convergence in prices across the eurozone was always seen as one of the big advantages of the single currency, although the evidence that it had occurred had been patchy.
This new survey shows that for branded goods at least, there is some sign of a consistent gradual convergence of price levels, the Financial Times said. The picture of convergence within the eurozone is complicated by marked price differences in different markets.
While Madrid's prices were overall only 2.5 per cent below the eurozone average alcohol and tobacco, for example, were 10.6 per cent below average, while durable leisure goods were priced 3 per cent above the average. A selection of services were expensive in Amsterdam while food was cheap, Financial Times said.
In London, alcohol and tobacco were 61 per cent more expensive than the eurozone average, while household non-durable goods such as washing powder and toothpaste were priced 14 per cent below average.
The biggest price increases in the eurozone over the past five years have affected cinema tickets, washing powder and cigarettes, according to the survey. The biggest price falls in five years have been for blank video cassettes, bottled water and Nurofen.
