The world’s most, and least, expensive cities

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EVERYBODY IS FEELING the pinch. Prices in big cities around the world have risen by an average of 8.1% in local-currency terms over the past year, according to the latest Worldwide Cost of Living Survey from EIU, our sister company. Vladimir Putin’s war is one cause. Energy prices have rocketed by 29% on average in western Europe and 11% globally since last year, exacerbated by Russia’s invasion of Ukraine in February. The cost of food is up, too. Both countries are important producers of cereals, oilseed and fertiliser, and global food prices are now increasing at their fastest rate this century. The impact of China’s covid-19 restrictions on global supply chains is another factor, although frustration among the population is growing. Overall the survey, which compares the prices of more than 200 products and services in over 170 cities, finds that the cost of living is rising at its fastest rate for at least 20 years. The chart below reveals which cities are the priciest to live in, and which are the cheapest.

Singapore, which came in first every year from 2014 to 2019, is once again the world’s most expensive city, although it shares this dubious accolade with New York, the survey’s benchmark city. (Paris pipped them in 2020 and Tel Aviv in 2021.) Prices have gone up across America: six of the top ten movers up the ranking are found there, including Atlanta and Boston. The two biggest climbers, though, are in Russia. St Petersburg has risen 70 places to 73rd since 2021 and Moscow has shot up 88 places to 37th. Western sanctions imposed after Russia invaded Ukraine have driven up local prices and, according to the survey, inflation in Moscow is now 17.1% (year on year) in local-currency terms, while in St Petersburg it has reached 19.4%.

At least Russian cities were safe enough to be surveyed. Just as with EIU’s liveability index earlier this year, its correspondents were unable to visit Kyiv to collect price data due to the war; the Ukrainian capital does not feature in the index this year. Caracas, Venezuela’s capital, was also excluded to avoid distorting the ranking, although its year-on-year price rise of 132% in local-currency terms is an improvement on 2019’s hyperinflation of over 25,000%. Damascus, in Syria, remains at the bottom of the table, a fair distance below Libya’s capital, Tripoli.

There is some good news ahead. Supply-chain problems should start to dissipate as demand softens and the cost of freight comes down. The Drewry World Container Index, which measures the price of 40-foot containers across major shipping routes, has declined by 74% year on year. And unless the war in Ukraine escalates, EIU predicts that commodity prices for energy, food and metals will fall next year. Overall, EIU’s forecast for 2023 is that global consumer-price inflation will fall from an average of 9.4% this year to 6.5%. Although still high, this should bring some relief to struggling households in the new year. ■