EIU’s Global Cost of Living Survey ranks three Indian cities 8th, 9th and 11th respectively on the list of cheapest cities; he says it reflects weak economies and currencies
New York and Singapore are the most expensive cities to live in, according to the Economist Intelligence Unit Worldwide Cost of Living survey of 172 cities around the world. The survey cited the war in Ukraine and problems in the supply chain as reasons for the rise in costs.
Damascus, Tripoli and Tehran were the cheapest cities, reflecting weak economies and currencies. Even in these cities, inflation was moderate. From India, Ahmedabad, Chennai and Bengaluru joined the list of cheapest cities, ranked 8th, 9th and 11th respectively among 172 respondents worldwide.
The survey was conducted between August 16 and September 16, 2022.
Cities around the world have faced a cost-of-living crisis, with overall prices rising by an average of 8%. The fastest price increase was a liter of gasoline, which on average rose by 22% year-on-year in local currency.
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Still, local prices were worse in some parts of the world. In Istanbul and Colombo, petrol prices increased by 148% and 189%. Gas and electricity prices in Western European cities rose by an average of 29% in local currency, while the global average rose by 11%.
The prices of utility services such as electricity, as well as food and basic household goods and cars, also rose rapidly by an average of 9.5%. In contrast, prices of recreational goods and services were subdued; this may reflect lower demand as consumers focus on spending on essentials.
Supply chain issues
“The war in Ukraine, Western sanctions against Russia and China’s zero-covid policy have created supply chain problems that, along with rising interest rates and exchange rate changes, have led to a cost-of-living crisis around the world,” said Upasana Dutt, head of global cost-of-living at EIU.
“We can clearly see the impact in this year’s index, with average price growth across the 172 cities in our survey being the strongest we’ve seen in the 20 years for which we have digital data. We expect prices to start coming down in the coming year as supply bottlenecks begin to ease and the slowing economy weighs on consumer demand,” added Dutt.
Top of the list
Among the most expensive cities, Singapore and New York overtook Israel’s Tel Aviv and dropped it from first place to third. Hong Kong and Los Angeles were joint fourth, followed by Zurich, Geneva, San Francisco, Paris, Copenhagen and Sydney.
Singapore has been the most expensive city in the world for eight of the last 10 years, while New York has taken the top spot for the first time.
Caracas, Venezuela, was the worst hit, with inflation rising 132%, but the survey did not include the city as it still suffers from hyperinflation and so as not to skew the average. However, this is a big improvement over 2019’s inflation of 25.504%.
The Russian cities of Moscow and St. Petersburg were the next worst affected by the inflationary crisis caused by the war in Ukraine and Western sanctions against Russia, with the two cities recording the highest jumps in the rankings to 88th and 70th places respectively.
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According to the price survey, inflation in Moscow is now 17.1 percent year-on-year in local currency, and 19.4 percent in St. Petersburg.
US cities rise in rankings with strong dollar
All 22 U.S. cities in the survey rose in the rankings due to rapid price growth and a strong dollar. Six of those (Atlanta, Charlotte, Indianapolis, San Diego, Portland and Boston) were among the 10 cities with the biggest jumps in the rankings.
Most other European cities fell in the rankings as the energy crisis and weakened economies weakened the value of the euro and other local currencies. Capital controls, import crackdowns and the conversion of European gas payments into rubles support the value of the local currency. Stockholm, Luxembourg and Lyon fell the most in the ranking.