What is the cost of living in Luxembourg?

Luxembourg is an attractive country offering an interesting quality of life, as highlighted by expats who have settled there. But living in Luxembourg comes at a price. And you need to take this into account when you move here. 

It's true that Luxembourg's economy is flourishing, and unemployment is low compared to other European countries. Companies are recruiting and attracting workers from neighboring countries and other continents.

However, despite remuneration levels higher than all OECD countries, the cost of living is high. Moving to Luxembourg means taking all these aspects into account. Find out more here. 

Inflation on the rise since 2021 in Luxembourg

As elsewhere in the world, inflation has risen sharply in Luxembourg, from 0.8% in 2020 to 2.53% in 2021 and 6.34% in 2022. Driven upwards by higher prices for petroleum products (+27.6%), other services will also be impacted by higher prices in 2021.

Nevertheless, the inflation rate in Luxembourg remains lower than in other European countries. Statec (Luxembourg's statistics agency) forecasts an inflation rate of 3.8% in 2023 and 2.6% in 2024.

Price increases were particularly felt in the following sectors:

Luxembourg energy sector: global price rises

In 2021, households had to cope with a +50% rise in the price of heating oil and +18% in the price of town gas. Diesel has risen by 25.1% and petrol by 22.6%. Today, the price of heating oil is around 1.50 euros/liter. 

This massive rise in energy prices has led the Luxembourg government to set energy prices for the years 2023 and 2024. Today, average prices are : 

• 0.80 euros/litre for heating oil
• 0.25 euros/kwH for electricity, half the normal price
• 1.0 euro/m3 for gas, which would cost twice as much without state aid
• 300 euros/ton for wood pellets, while the price should exceed 400. 

The housing sector in Luxembourg: housing becomes unaffordable

Housing has surged by more than 10% every year since 2019. On the other hand, in the face of financial difficulties and rising interest rates, 2023 marks a decline in prices. See the latest real estate market trends

However, prices per m2 of over 10,000 euros can be achieved in Luxembourg and many surrounding towns.

At the same time, rents are soaring, reaching prices of over 20 euros per m2. 

Housing has become unaffordable for many residents. As a result, since 2022, Luxembourgers have been leaving the country to settle on the other side of the border. 

Luxembourg's financial sector: a rise in borrowing rates 

Financial services have risen by +5.2% since 2021. After experiencing rates of less than 1%, very low interest rates are now giving way to borrowing rates of around 4.5% in Q3 2023. Borrowing is becoming increasingly difficult. The market is getting tougher, and without a substantial down payment, many residents are unable to buy their own home.

Inflation in other sectors of the Luxembourg economy

Over the same period, maintenance and repair services rose by +5.2%, and hairdressing by +3.6%. 

Clothing prices rose by 6%, while food prices jumped by almost 10%. 

Indexation of wages, pensions and minimum social benefits in Luxembourg

In Luxembourg, a system of wage and salary indexation has been in place since 1921. Based on changes in household consumer prices, the index is calculated on a number of everyday consumer goods.

In 1921, the index was based on 8 everyday products such as butter and bread. Today, the price index lists over 8,000 everyday consumer products, grouped into 255 categories. The index is regularly monitored by Statec, Luxembourg's statistics institute.

An increase in this index of 2.5% systematically leads to a 2.5%increase in wages, pensions and minimum social benefits. At present, wage indexation is activated several times a year, in 2022 and 2023.

In addition to salaries, which appear to be very attractive in Luxembourg, the cost of living in the Grand Duchy must also be considered.

Luxembourg household budgets

Minimum income levels 

According to the latest figures published by STATEC (Luxembourg's statistics agency), an employee in Luxembourg will earn an average annual salary of 4,932 euros for full-time work in 2021. 

This is confirmed by the OECD, which states that the average salary in Luxembourg is the highest among OECD countries, according to the latest study, with an average annual salary of $65,854.

The minimum wage today is over 2,500 euros gross per month for an unskilled worker over 18 . On the other hand, according to the latest STATEC survey, an average net income of at least 4,213 euros (+3.3% on 2018) is required for a couple with 2 children, 2,912 euros (+7.6%) for a childless couple, and 2,110 euros (+6.1%) for a single person.

Breakdown of expenditure per Luxembourg household

Housing plays a major role in the budgets of Luxembourg households. It costs a minimum of 1,542 euros a month to house a family of 4, 1,292 euros for a couple and 1,101 euros for a single person (including heating costs). This is equivalent to 38% of income for a couple and 55% for a single person!

See real estate market and housing prices

Food is the 2nd biggest expense for a Luxembourg household. A family of 4 needs to spend around 920 euros a month on food. A couple will need 565 euros and a single person at least 271 euros. This item represents up to 25% of the budget for a couple.
Social life is the 3rd item of expenditure, with around 13% of the budget for all household types.
Transport is the 4th item of expenditure, with 421 euros per month for a family of 4 and 235 euros for a single person.

Price levels in Luxembourg

Looking at services and other consumer goods, prices in Luxembourg appear higher than in other European countries.

Energy and telecommunications prices in Luxembourg

Electricity and gas prices reached record levels in 2021, and will be even higher in 2022 with the war in Ukraine. According to the latest figures for 2021, the average household spends over 2,000 euros a year to heat its home. In total, the energy bill amounts to 335 euros per month for heating and pump costs.

Internet subscription costs around 50 euros a month on average, depending on speed.

Food prices in Luxembourg

On average, you'll need to pay 17 euros for a dish in an ordinary restaurant and 3.5 euros for a coffee. A small bottle of water costs an average of 2.8 euros and a draught beer 5 euros;

At the supermarket, 2.5 kg of potatoes will cost you around 4 euros, 1 kg of tomatoes or apples 3 euros. A kg of minced beef will cost 17 euros, 1 liter of milk 80 cents and a box of 12 eggs around 3 euros. A bottle of shampoo costs 4 euros and shower gel 2 euros.

Leisure prices in Luxembourg

Cinema tickets are €12 for adults.

A sports membership costs between 20 and 30 euros per month, depending on the formula. A sports coach will charge around 40 euros, or even more for a 30-minute session.

Admission to the museum costs between €5 and €7 for adults. Children and teenagers receive free tickets.

Lower prices in Luxembourg than in neighboring countries

Some products are less expensive than in neighboring countries. These include alcohol (1 bottle of 75 cl crémant costs 7 euros). Tobacco costs 5 euros a pack.

For a long time, fuel was cheaper in Luxembourg, but this has not been the case since the Russian-Ukrainian crisis. Today, prices are close to or even exceed 2 euros per liter. It should be noted, however, that prices at the pump are strictly regulated by the government and are identical at all petrol stations throughout the country.

The average price of a pack of cigarettes in Luxembourg is 5.3 euros.

Luxembourg is the first country in the world to introduce free public transport in 2020.