Worldwide Cost of Living Survey 2008

Moscow is the world’s most expensive city for expatriates for the third consecutive year, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position climbing two places since last year, where as London drops one place to rank third. Oslo climbs six places to 4th place and is followed by Seoul in 5th. Asunción in Paraguay is the least expensive city in the ranking for the sixth year running.

With New York as the base city scoring 100 points, Moscow scores 142.4 and is close to three times costlier than Asunción which has an index of 52.5. Contrary to the trend observed last year the gap between the world’s most and least expensive cities now seems to be widening.

Mercer’s survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey.

Yvonne Traber, a principal and research manager at Mercer, commented: “Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings.”

She added: “Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and India are creeping up the list. Conversely, some locations such as Stockholm and New York now appear less costly by comparison.

“Our research confirms the global trend in price increases for certain foodstuffs and petrol, though the rise is not consistent in all locations. This is partly balanced by decreasing prices for certain commodities such as electronic and electrical goods. We attribute this to cheaper imports from developing countries, especially China, and to advances in technology.

Europe
Moscow is ranked the most expensive city both in Europe and globally for the third year running. The city’s score has steadily increased over the last few years and is currently at 142.4 (compared to 134.4 in 2007 and 123.9 in 2006). London is the next European city in the ranking at 3rd place (score 125), down one from last year, while Oslo has jumped six places to rank 4th with a score of 118.

Other European cities in the global Top 10 include Copenhagen at 7th and Geneva in 8th. Both cities have dropped one place from last year. Zurich remains in 9th place, whereas Milan climbs one to 10th place. Sofia in Bulgaria is again the least expensive European city for expatriates in 97th place, although the city has climbed 11 places in the overall ranking.

Several European cities have experienced a significant rise in the rankings this year, mainly as a result of local currency strengthening against the US dollar.

Middle East
Tel Aviv is again the most expensive city in the Middle East, positioned 14th (score 105) on the global list, up three places from 2007.

Both Dubai and Abu Dhabi have dropped significantly this year, positioned at 52 and 65, respectively. This is mainly due to the UAE dirham being pegged to the US dollar.

America
The only North American city to feature in this year’s top 50 is New York in 22nd place (score 100), dropping seven places in one year. l other US cities have also experienced a significant decline in the rankings. For example, Los Angeles has moved from 42nd to 55th place, Miami from 51st to 75th place and Washington, DC, from 85th to 107th place.

“The decline in the ranking of all US cities is due to the weakening value of the US dollar against most major world currencies,” said Mitch Barnes, principal at Mercer in the US. “The dollar has been declining steadily for the past several years, which has resulted in an overall decrease in the cost of living in 19 US cities, relative to other major global cities studied.

Canada
In 54th place (score 88.1), jumping 28 places from last year, Toronto is the most expensive city for expatriates in Canada. All other Canadian cities in the survey have experienced similar rises, with Vancouver moving from 89th to 64th, Calgary from 92nd to 66th and Montréal from 98th to 72nd. This reverses last year’s trend which saw Canadian cities decline, and places them back where they have traditionally been rated. The Canadian dollar has appreciated nearly 15% against the US dollar, the main reason for these movements.

Asia
Tokyo is the costliest Asian city, in 2nd place (score 127), two places up since last year. Seoul follows in 5th place and Hong Kong closely after in 6th. Singapore ranks 13th.

Whilst the five top-scoring cities in Asia remain relatively stable in the ranking there have been significant changes further down the list. In India, Mumbai moves up four places to reach 48, whereas New Delhi climbs 13 places to 55 due to the strengthening of the India rupee against the US dollar. Although India has experienced relatively high inflation, this has increased at similar pace to New York and has therefore had a reduced impact on its cities’ rise in the rankings. Manila rises a total of 27 places, ranking 110th, mainly as a result of price increases for international-standard accommodation.

In contrast, certain cities in this region have experienced significant falls in the ranking. Some examples are Jakarta falling from 55th to 82nd place and Bangkok dropping from 95th to 105th place.

Australia and New Zealand
Sydney continues to be the most expensive city for expatriates in this region, moving up six places in the overall ranking to reach 15th place (score 104.1). Melbourne follows in 36th place, jumping 28 places and Perth climbs 31 places to reach ranking number 53.

Both Australian and New Zealand cities are moving up in the rankings due to the appreciation of their local currencies against the US dollar. New Zealand’s cities remain the less costly option for expatriates, however, with Auckland in 78th place and Wellington in 93rd place.