All over the world, it’s been a tough year on wallets.
Supply-chain blockages and changing consumer demand have pushed up the cost of living in many of our biggest cities, according to new research published Wednesday, and inflation is the fastest recorded over the past five years.
One city has been experiencing more rapid change than most, jumping from fifth place to first in this year’s Worldwide Cost of Living index released by the Economist Intelligence Unit (EIU).
The Israeli city of Tel Aviv topped the rankings for the first time, overtaking last year’s leader Paris, which is now tied in second place with Singapore.
The EIU attributes Tel Aviv’s sharp rise on the index to increases to grocery and transport prices and the strength of the Israeli shekel against the US dollar.
Everyday goods and services
The 2021 Worldwide Cost of Living index tracks the cost of living across 173 global cities – 40 more than last year – and compares the price of more than 200 everyday products and services.
Data for the survey, which has been carried out for more than three decades, is gathered by EIU’s global team of researchers each March and September.
The index is benchmarked against prices in New York City, hence cities with currencies that are stronger against the US dollar are likely to appear higher in the rankings.
Zurich and Hong Kong are at Nos. four and five respectively, having held the top spot last year alongside Paris. New York, Geneva, Copenhagen, Los Angeles and Osaka round up the rest of the top 10.
The upper rankings rankings continues to be dominated by European and developed Asian cities. The lowest-ranking cities are mainly in the Middle East, Africa and less wealthy parts of Asia.
The EIU reports that, on average, prices for the goods and services covered by the index have risen by 3.5% year on year in local-currency terms, compared with an increase of just 1.9% this time last year.
Those much-reported global supply-chain problems have contributed to price rises and the Covid-19 pandemic and social restrictions are still affecting production and trade around the world. With a new coronavirus variant currently causing widespread alarm, these issues won’t be going away in a hurry.
Rising oil prices drove a 21% increase in the price of unleaded petrol, reports the EIU, but there were also big price hikes in the recreation, tobacco and personal care categories.
The highest-rising city in 2021 was the Iranian city of Tehran, which jumped 50 places from No.79 to No.29 as US sanctions resulted in shortages and higher prices.
The Syrian city of Damascus once again ranks as the cheapest city in the world, as its war-torn economy continues to struggle. Damascus and Tehran suffered from very high inflation in 2021, as did Caracas in Venezuela and Buenos Aires in Argentina.
More to come
Upasana Dutt, head of Worldwide Cost of Living at EIU, said in a statement: “Although most economies across the world are now recovering as Covid-19 vaccines are rolled out, many major cities are still seeing spikes in cases, leading to social restrictions. These have disrupted the supply of goods, leading to shortages and higher prices.
We can clearly see the impact in this year’s index, with the rise in petrol prices particularly stark. But not all cities saw price increases. Many of the cities towards the bottom of our rankings saw prices stagnate or even fall, partly because their currencies weakened against the US dollar.
Over the coming year, we expect to see the cost of living rise further in many cities as wages increase in many sectors. However, we are also expecting central banks to raise interest rates, cautiously, to stem inflation. So the price increases should start to moderate from this year’s level.”
World’s most expensive cities to live 2020
1. (tie) Paris, France
1. (tie) Hong Kong
1 (tie) Zurich, Switzerland
5. (tie) Osaka, Japan
5. (tie) Tel Aviv, Israel
7. Geneva, Switzerland
9. Copenhagen, Denmark
10. Los Angeles
10. Osaka, Japan
11. Oslo, Norway
12. Seoul, South Korea
13. Tokyo, Japan
14. (tie) Vienna, Austria
14. (tie) Sydney, Australia
16. Melbourne, Australia
17. (tie) Helsinki, Finland
17. (tie) London, UK
19. (tie) Dublin, Ireland
19. (tie) Frankfurt, Germany
19. (tie) Shanghai, China