Abstract
It is a long established stylized fact that the price level, expressed in the same currency unit, is lower in less developed countries than in more developed countries. The eight new European Union (EU) Member States of Central and Eastern Europe (CEE) are no exception to this rule. The price level of CEE countries, converted into euro, is well below the price level of the euro area average (Figure 1). At the same time, GDP per capita figures expressed in Purchasing Power Standards (PPS) in CEE show striking similarities with overall price levels in CEE at first glance, given that they are also far below the levels observed in the euro area in 2005. Slovenia and the Czech Republic are the only countries which is close to the level of economic development of the least developed old EU countries such as Greece or Portugal.
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