If you had to picture the world's most expensive cities, the first places that come to mind might be Paris or New York.
Next on the list might be Rome, London or Shanghai.
But it turns out the city that tops the list is in Israel.
Tel Aviv was named the most expensive city in the world to live in in 2021by global research group The Economist Intelligence Unit (EIU).
The survey, whichcompares costs in US dollars for goods and services in 173 cities, reported the city's cost of living eclipsed that in places such asSingapore, Hong Kong and New York for the first time.
The EIU said the unenviable title was caused by the strength of the Israeli currency, the shekel, which made local prices more expensive when they were converted into US dollars.
But to locals, the EIU's findings are notsurprising.
Dekla Shaar was forced to pack up her belongings and move her husband and five childreninto a tent in a public park after she could no longer afford her rent in Tel Aviv.
It was the lowest point of her life.
But Ms Shaar said she was left with no choice because of the soaring cost of lliving in Israel's coastal city.
"This is a very painful feeling, it feels so bad as a mum," she said.
"I've worked so hard to keep my kids happyuntil I collapsedand I had nothing to give them."
She is just one of many families making sacrifices so they can continue to live in the world's most expensive city.
Life in Tel Aviv comes with a hefty price tag
The Shaars became a one-income family last year after Ms Shaar had a car accident and could no longer work.
Her husband, who is a garbage collector for the Tel Aviv Municipality, earns about $2,600 per month.
Ms Sharr said it was not enough to cover the $3,000 per month rent of their two-bedroom apartment in Giv'atayim,one of the poorest neighbourhoods of Tel Aviv.
The average monthly rent for a two-bedroom apartment in Tel Aviv in 2020 was $2,064, and continued rising during the early stages of the pandemic,according to Israel's Central Bureau of Statistics.
"Life in Tel Aviv is very expensive, prices are climbing all the time," Ms Shaar said.
"The price of bread, which is a basic food item, is so high, and rent, which was once affordable, today it is not.
"Everything is getting expensive in Israel."
The EIU report also found the city experienced steep hikes in groceries, transport and alcohol costs — booze prices in Tel Aviv were the second highest in the world.
At a suburban Tel Aviv supermarket visited by the ABC, the cost of some basic groceries was nearly double that inAustralia.
The cheapest loaf of brown bread cost $9 – the same as a jar of basic peanut butter.
A box of tea bags was priced at about $11 and one kilogram of chuck beef steak would set a family back $30.
Ms Shaar and her family now live on a line of credit at some shops or rely on food donations to eat.
"I owe this mini-market some money.I feel embarrassed to walk in there anymore," she said, pointing to a supermarket close to where she met the ABC.
"When I have the money, I will pay them back."
The 'perfect storm' behind the city's status
Like many other countries, Israel has been experiencing a post-pandemic surge in inflation, though it is still far below Western levels.
In July, it recorded a jump in its annual inflation rate to 5.2 per cent —its highest level since October 2008 —from 4.4 per centin June.
Australia's inflation rate is6.1 per cent.
Economics professor Elise ScheinerBrezis from Bar Ilan University said there were several government-influenced factors that had created a "perfect storm"in Israel.
Most products, including groceries, attract a 17 per cent government tax.
Some imported products are also slugged with an additional tariff and purchase tax, but the exact figures are kept largely secret.
Professor Brezis said Israel also operated like a "closed market"that limited imports, leaving Israelis to rely on local production that was controlled by only a handful of companies.
"We're a small countryso production is done by only two or three companieshaving a lot of monopoly power," she said.
"Then take into account you have very high import tariffs – especially on agricultural products – so when you have importsyou often have a sole importer.
"And therefore you have one monopoly on top of the other, making everything much more acute."
Earlier this year, angry Israelisprotested on the streets of Tel Aviv to pressure the government to reduce the cost of living.
The issue has dominated political campaigning ahead of the country's general elections in November.
A cost-of-living report by Israeli aid organisation Latet found more than one-quarter of the country's population livedin poverty.
Politicians have promised to open up the marketby allowing more imported goods, and investigating allegations of collusions between some Israeli production companies.
"But any changes they make will take time to filter down to the people of Israel," Professor Brezis said.
"It could take years."
Posted, updated
As an expert in global economic trends and living cost dynamics, I can shed light on the factors that contribute to Tel Aviv being named the most expensive city in the world in 2021. The Economist Intelligence Unit (EIU) conducted a comprehensive survey comparing costs in US dollars for goods and services in 173 cities. Tel Aviv claimed the top spot due to the strength of the Israeli currency, the shekel, making local prices more expensive when converted into US dollars.
The article highlights the real-life impact of this ranking on residents like Dekla Shaar, who had to relocate her family to a tent in a public park due to the soaring cost of living in Tel Aviv. This is indicative of a broader trend, with many families making sacrifices to cope with the high living expenses in the city.
The EIU report identifies various factors contributing to Tel Aviv's expensive lifestyle. One key element is the post-pandemic surge in inflation experienced by Israel, though it remains below Western levels. Economics professor Elise Scheiner Brezis from Bar Ilan University points to a "perfect storm" of government-influenced factors. A 17% government tax on most products, additional tariffs on some imported goods, and a closed market that limits imports contribute to the challenging economic environment.
The article also mentions protests in Tel Aviv where citizens demanded government action to reduce the cost of living. The issue has become a focal point in political campaigns, and promises have been made to open up the market by allowing more imported goods and investigating allegations of collusion among local production companies. However, the expert in the article emphasizes that any changes will take time to have a tangible impact on the people of Israel, possibly taking years.
In summary, Tel Aviv's status as the world's most expensive city in 2021 is a result of a complex interplay of economic factors, including currency strength, inflation, government taxes, import tariffs, and market dynamics. The real-world consequences for residents underscore the significance of addressing these issues for the well-being of the population.
