Cost of Living in Luxembourg

Accommodation prices - €800-900 for a 1 bed flat, €1,200-1,500 for a 2 bed flat, €2,500 3/4 bed house + charges of around €150-250 depending on the size of the property
Public transportation fares - €1.50 for a 2 hour bus/train ticket. An annual bass pass costs €400.
Food prices - if you're lucky enough to get food vouchers through work you pay approx €50 tax for approx €160 of vouchers. We find this nearly covers all our food for the month (a couple) and I'll supplement it by maybe €30-40. So for a couple, you're looking at around €200 and upwards depending on the size of the family.
Energy prices (oil, electricity) - our electricity bill is set at €45 a month. Water and gas is included in our monthly charges (€170 a month) for a brand new, two bedroom flat.
Common bills (Internet, television, telephone, mobile phone) - both Tango and Luxembourg Online do a €35 a month package which includes up to 20Mb internet, fixed line rental with unlimited national calls and a free mobile SIM. Extra benefits are offered.
Prices of a good menu in a traditional restaurant - plat du jour varies between €8-12. Main courses will be around €11-15. Starters will be around €10. Desserts - €6.
Prices of a beer or a coffee in a regular pub - take-away coffee (Starbucks style) around €2.50. Beer around €3-4.
Diesel - currently around €1 per litre. Petrol - €1.20 per litre.

 If you look at the Total Cost of Property Ownership in Luxembourg it is not that bad:
1. While the property prices can be high, interest rates are reletively low, and there is lots of financial support available especially if you have a family
2. Comune Taxes are very reasinable - and offset the higher capital costs. Would you rather pay a higher amount for a property or higher council/comune charges that you will never get back? This is an advantage when you get to pension age.
3. If you stay out of the city, prices drop dramatically - and with a decent public transport/road network - it's not such a hardship, and probably takes you less time to get to work than in some larger cities.
As for other things like clothes, a lot of people will make a monthly trip across the border to Trier (Germany) Metz (France) for things like clother - which are cheaper and there is more choice. It's only about an hour away (depending upon where you live).