Principal Component Analysis of Economic Factors Affecting Food Consumption and Labor Market Performance in the European Union

The study analyzes the structure of the relationships between the economic determinants of food consumption and labor market performance in the European Union, using an exploratory approach based on principal component analysis. The motivation for this research comes from the growing importance of food price dynamics and labor market transformations in the recent economic context, characterized by inflationary pressures and persistent structural differences among member states. The empirical analysis is based on secondary data extracted from Eurostat for the year 2024, covering a sample of 29 European countries. The set of variables used reflects the economic conditions of food consumption, through the harmonized food price index, as well as labor market performance, through indicators such as the economic activity rate, labor costs, and labor productivity. The adopted methodology, principal component analysis, allows for the reduction of data dimensionality and the identification of latent dimensions that structure the relationships between these variables, without imposing causality assumptions. The results highlight the existence of two principal components that explain 78.02% of the total variation in the data. The first component reflects a dimension of economic efficiency, characterized by the relationship between productivity, labor costs, and food price levels, suggesting the interdependence between the economic conditions of consumption and labor market performance. The second component is dominated by the economic activity rate and highlights the intensity of labor force participation, indicating the existence of a distinct dimension of the labor market, relatively independent of economic performance. The interpretation of the results indicates the presence of structural patterns and regional differences among European Union economies, in which more developed countries are characterized by high levels of productivity and prices, as well as by more intense labor market participation, while less developed economies exhibit less favorable combinations of these indicators. From a methodological point of view, the results confirm the relevance of principal component analysis in investigating the complex relationships between macroeconomic variables, although the exploratory nature of the method requires cautious interpretation of the conclusions. The study contributes to the literature by integrating the economic determinants of food consumption and labor market performance into a common analytical framework, offering a synthetic perspective on their interdependence in the European context. The results may serve as a starting point for future research that explores these relationships in greater depth using complementary econometric methods or by expanding the set of variables analyzed.