Why is it significant?

In addition to openness, price measures can provide an insight into the level of competitive intensity. However, there are a number of reasons (taxation, retail costs, exchange rate movements, economies of scale) why prices may differ between countries.

How does the UK perform?

The most comprehensive source of data on international price differentials is the OECD’s triennial survey of price levels.  The OECD survey shows that prices are lower in many key consumer goods sectors in the US than in the UK, particularly those most visible to visitors such as food and clothing (chart 2.3.1). The UK has seen larger falls in the price of gas and electricity during the past decade than the EU average (chart 2.3.2).