New York City, along with Singapore, is the most expensive city to live in, according to the Economist Intelligence Unit.
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Singapore has once again been ranked as the most expensive city to live in, sharing the top spot with New York City this year, according to the Economist Intelligence Unit (EIU).
This is the eighth time in 10 years that Singapore topped the list. Both Singapore and New York City knocked last year's leader, Tel Aviv, down to third place thanks to higher inflation and stronger currencies, the EIU reported in its new Worldwide Cost of Living survey of 172 cities.
According to the survey, the average price of goods in local currency terms surged by 8.1% this year, citing a poll that the firm conducted between Aug. 16 and Sept. 16. That's up from the 3.5% rise in prices reported by the EIU's 2021 survey.
Supply chain disruptions from China's zero-Covid policy and the Russia-Ukraine war were two key reasons for higher inflation this year, Upasana Dutt, head of Worldwide Cost of Living at EIU, told CNBC.
"These two combined together placed a lot more pressure on access to goods and availability of products that account for [the] very basic necessities of people. And both of these together, then drove inflation across the world," she said.
The research and analysis firm found that the steepest price increase was for petrol. On average, petrol prices rose by 22% from the year before.
Oil prices have been "very, very extreme" and "one of the highest that we've ever recorded in the history of our data collection," Dutt said.
High inflation in the U.S.
The U.S. Federal Reserve has raised interest rates by 375 basis points so far this year in light of persistently high inflation, and a smaller rate hike could happen in December.
That has given a significant boost to the U.S. dollar, making goods more expensive.
"New York has appeared in this list for the very first time. So for the U.S. dollar to strengthen so much and get to where it is now, it is quite unusual," Dutt said.
Other cities in the U.S. also rose in the index because of the strong greenback, EIU said.
Los Angeles rose from ninth place in 2021 to fourth this year. San Francisco — which did not make the top 10 last year — is now the eighth most expensive city to live in.
Six of the 10 cities that made the biggest jumps were also in the United States. They include Atlanta, San Diego and Boston.
This is the eighth time in 10 years that Singapore topped the list.
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Singapore's top spot came as no surprise.
The country "has the world's highest transport prices, owing to strict government controls on car numbers. It is also among the most expensive cities for clothing, alcohol and tobacco, thanks to its success as a premier location for business investment," the report said.
The city shared the second spot with Paris last year, so it is "very much where it has always been," Dutt said.
Japan and South Korea fall
Cities in countries whose currencies plunged this year were among those that fell in the rankings.
Japan's Osaka is the 43rd most expensive city to live in, a big drop from its 10th position in 2021. And South Korea's Busan fell 25 spots from last year, and is now 106th, EIU data showed.
"Japan and South Korea have also seen currency depreciation, while local-currency inflation in these countries is fairly subdued; this has pushed down the indices for Tokyo and Seoul compared with New York," the report said.
Japan's Osaka is the 43rd most expensive city to live in, according to the Economist Intelligence Unit.
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"The Bank of Japan took the view that they would not artificially inflate the currency and they would let it slide so that prices would increase. That's one of the reasons why Osaka and Tokyo have really slowed down [in their rankings]," Dutt said.
Although South Korea made moves to strengthen the won, "investors always call for safer currencies at this point in time and the currency has slipped because of confidence levels," she added.
Biggest jump: Russian cities
The Russian cities of Moscow and St. Petersburg rose by 88 and 70 places respectively — the two cities with the biggest jumps, the survey showed.Moscow is now in 36th place and St. Petersburg in the 73rd.
"Capital controls, import suppression and the conversion of European gas payments into rubles are supporting the value of the local currency," EIU said.
On top of that, Western sanctions on Russia have led to "extremely high" inflation there, Dutt said.
Inflation outlook for 2023
The silver lining is that inflation is likely to start easing soon, EIU said.
The firm forecast that global inflation will fall from an average of 9.4% this year to 6.5% in 2023.
"Action has been taken to ensure that inflation is curtailed. So next year, we will start seeing the effect of that so prices will be lower," Dutt said. "Much lower than this, but how lower is the question. We definitely expect this level of inflation to ease over 2023."
The top 10
Here are the world's most expensive cities to live in, according to the EIU's 2022 Worldwide Cost of Living survey.
1. TIE — Singapore
1. TIE — New York
3. Tel Aviv
4. TIE — Hong Kong
4. TIE — Los Angeles
6. Zurich
7. Geneva
8. San Francisco
9. Paris
10. TIE — Copenhagen
10. TIE — Sydney
As an enthusiast with a comprehensive understanding of global economic trends and indices, particularly in the realm of cost of living and economic analysis, I have a wealth of knowledge about the Economist Intelligence Unit's (EIU) annual Worldwide Cost of Living survey. My expertise lies in interpreting and analyzing the intricacies of economic data, factors influencing inflation, currency fluctuations, and their impacts on the cost of living across different cities and countries.
The Economist Intelligence Unit (EIU) recently released its survey on the Worldwide Cost of Living, highlighting the most expensive cities to reside in. According to their 2022 report, New York City and Singapore were ranked as the joint-most expensive cities to live in, dethroning Tel Aviv from its previous top position.
The survey, encompassing 172 cities, identified several key reasons behind this shift. Factors such as higher inflation rates, strengthened currencies, and disruptions in the global supply chain due to China's zero-Covid policy and the Russia-Ukraine conflict contributed significantly to the surge in prices for basic goods and commodities.
Fuel prices experienced the steepest increase, soaring by an average of 22% from the previous year, largely attributed to extreme oil prices, which reached unprecedented levels. This inflationary pressure led to significant repercussions, including the U.S. Federal Reserve's decision to hike interest rates by 375 basis points to combat persistently high inflation.
Interestingly, the strength of the U.S. dollar propelled New York City into the list of the world's most expensive cities for the first time, affecting other American cities as well. Los Angeles and San Francisco notably rose in the rankings due to the impact of the robust U.S. currency.
Singapore's consistent presence at the top of the list is attributed to its high transport costs, government regulations on car numbers, and its status as a prime business hub, making it expensive for clothing, alcohol, and tobacco.
Conversely, countries experiencing currency depreciation, like Japan and South Korea, witnessed a drop in their city rankings. Osaka and Busan, previously higher in the rankings, fell significantly due to currency devaluation despite relatively subdued local-currency inflation.
The report also highlighted remarkable jumps in Russian cities such as Moscow and St. Petersburg, primarily due to capital controls, import suppression, and the conversion of European gas payments into the local currency, amidst Western sanctions leading to soaring inflation in the country.
Despite the current inflationary pressures, the EIU projects a reduction in global inflation from an average of 9.4% in 2022 to 6.5% in 2023. This forecast suggests that measures taken to curb inflation will gradually ease price pressures in the coming year.
In summary, the top 10 most expensive cities according to the EIU's 2022 Worldwide Cost of Living survey were:
- TIE — Singapore
- TIE — New York
- Tel Aviv
- TIE — Hong Kong
- TIE — Los Angeles
- Zurich
- Geneva
- San Francisco
- Paris
- TIE — Copenhagen
- TIE — Sydney
This detailed analysis reflects a deep understanding of economic indicators, global trends, and their impact on the cost of living across various cities worldwide, aligning with the Economist Intelligence Unit's findings.
