Europe falls behind USA in cost of living
ECA International’s latest Cost of Living report today reveals that Europe now accounts for less than a fifth of the world’s most expensive cities, with 11 European cities dropping out of the top 100.
According to the report from global mobility experts, ECA International (ECA), the weakened euro has caused many major Eurozone cities to fall behind Central London in the cost of living rankings, including Milan in Italy, Rotterdam and Eindhoven in the Netherlands, Toulouse in France and German cities such as Berlin, Munich and Frankfurt. Although UK cities* remain steady in the global rankings with central London at 106th place, the UK capital has risen to the 23rd most expensive city in Europe; up from 34th last year.
Conversely, 25 US cities now feature in the top 100 most expensive in the world, up from only 10 last year, due to the strengthened dollar. Switzerland also holds strong with four cities in the global top ten; with Zurich (2nd), Geneva (3rd) featuring the highest and sit behind only Ashgabat in Turkmenistan.
ECA International’s Cost of Living Survey compares a basket of like-for-like consumer goods and services commonly purchased by international assignees in 482 locations worldwide. The survey allows businesses to ensure that their employees’ spending power is maintained when they are sent on international assignments. ECA International has been conducting research into cost of living for over 45 years.
Steven Kilfedder, Production Manager for ECA International, said: “The euro has suffered a difficult 12 months compared to other major currencies, causing nearly all European cities to drop in the cost of living rankings. The only European locations that buck this trend were cities in the UK and some in Eastern European locations that were unaffected by the poor performance of the euro. As the USD gains strength against the euro, most Europeans will find general basket goods more expensive in the USA this year such as a loaf of bread costing around GBP 3.70 in New York City versus GBP 1.18 in London, for example.”
New items on ECA’s Cost of Living shopping basket this year include ice cream and multivitamins, revealing a 500ml tub of premium ice cream (such as Ben & Jerry’s or Haagen-Dazs) cost GBP 8.07 on average in Hong Kong versus GBP 4.35 in Central London.
Dublin drops in the cost of living rankings
The weakened euro has had a slight impact on the cost of basket goods for foreign visitors to Dublin, seeing Ireland’s capital drop nine places in the top 100 most expensive cities (81st).
However this excludes accommodation costs, which was revealed to have increased by 8% in ECA’s latest accommodation report; attributed to the elevated demand from international companies taking advantage of Ireland’s low corporate tax rate. Dublin is ranked 26th in the world for the most expensive rental accommodation costs.
Ashgabat tops the table
The location with the highest cost of living in the world was Ashgabat in Turkmenistan, which rose a staggering 110 places from last year.
Kilfedder said “Although the rise of Ashgabat in the rankings may be a surprise to some, those familiar with the economic and currency issues experienced by Turkmenistan over the past few years may have seen this coming. Ever-escalating levels of inflation, coupled with a prominent illegal black market for foreign currencies pushing up the cost of imports, mean that at the official exchange rate, costs for visitors to the capital city Ashgabat have increased enormously – putting it firmly at the top of the rankings.”
Lower oil prices cause Moscow to drop out of top 100
Moscow in Russia dropped significantly in this year’s rankings – down 66 places from 54th – due to the depreciation of the rouble against other major currencies in the past year.
“Lower oil prices and economic sanctions in Russia have put the rouble under pressure and its resulting depreciation against other major currencies has made the country cheaper for foreign workers this year,” said Kilfedder.
Caracas, Venezuela drops from 1st to 238th place
Caracas, Venezuela, which was last year’s most expensive city in the world, has dropped to 238th place despite enormous prices rises causing inflation of almost 350000%. The hyperinflation was more than cancelled out by an equally spectacular drop in the value of the bolivar which has actually made the country cheaper for foreigners.
Strength of the US dollar sees US cities storm the top 100 rankings
The relative strength of the US dollar in the past year caused all US cities to jump in the cost of living rankings, with 25 cities now featuring in the top 100 most expensive in the world, up from only 10 in 2018. Manhattan (21st) is the most expensive city followed by Honolulu (27th) and New York City (31st), while San Francisco and Los Angeles have both re-entered the top 50 after dropping out last year (45th and 48th this year respectively).
“The strong US dollar has resulted in dramatic rises in the rankings for all locations in the United States, meaning that expats and overseas visitors to the US will now find that they need more of their home currency to buy the same goods and services as they did just one year ago” explained Kilfedder.
Hong Kong bounces back into the top 5, following boost to Hong Kong dollar
Countries with currencies closely tied to the US dollar have also seen an increase in their cost of living ranking, such as Hong Kong, which has recovered to 4th after dropping to 11th in 2018.
“Due primarily to the continued strength of the Hong Kong dollar, and despite low inflation, the cost of living in Hong Kong was relatively higher in the past 12 months than all other Asian cities in our list, with the exception of Ashgabat.” explained Kilfedder.
Asia accounts for 28 of the world’s top 100 most expensive cities, dominating over any other region. China has remained stable in the rankings following a major rebound last year, while Singapore jumped to 12th place – a long-term rising trend over the past five years.
Commenting on the rise of prices in China, Kilfedder said: “All 14 of the Chinese cities in our rankings feature in the global top 50 most expensive, with a number of developing cities such as Chengdu and Tianjin rising significantly in the rankings over the course of the past five years.”
US sanctions on Tehran’s trade makes it 2019’s cheapest in the world
There were major moves up the ranking for many Middle Eastern locations with currencies pegged to the US dollar. One such example is Doha, Qatar which saw the most significant rise, jumping over 50 places to 52nd. Prices for visitors to Qatar were pushed up by the strength of the currency as well as the newly introduced ‘sin taxes’, which have raised the prices of alcohol and soft drinks dramatically.
“In a move which will hit the pockets of football fans visiting the 2022 World Cup the state has imposed a 100% tax on alcohol, tobacco, pork products and a 50% tax on high-sugar drinks. Now a can of beer from the state alcohol distributer in Doha will set you back £3.80 each, nearly £23 for a six-pack.” said Kilfedder.
Tel-Aviv meanwhile entered the top ten most expensive locations in the world for the first time, while Dubai also jumped 13 places to enter the global top 50. Conversely, the Iranian capital Tehran was named as the cheapest location in the world in ECA’s rankings as a weakened economy was made worse by the introduction of US sanctions, severely affecting the nation’s international trade capabilities.
Zimbabwe’s devalued ‘currency’ causes capital to drop 77 places
Harare in Zimbabwe dropped 77 places, out of the top 100 this year due to the devalued local currency and economic issues that continue to blight the African nation.
Kilfedder explained: “The Zimbabwean government introduced the Real Time Gross Settlement (RTGS) dollar earlier this year which recognised officially what all expats and locals already knew – that government issued bond notes were not the equal of the US dollar. This devaluation made official the significantly cheaper prices that shops were already accepting for those paying in US dollars.”
Top ten most expensive locations in the world
Location 2019 ranking 2018 ranking
Ashgabat, Turkmenistan 1 111
Zurich, Switzerland 2 2
Geneva, Switzerland 3 3
Hong Kong 4 11
Basel, Switzerland 5 4
Bern, Switzerland 6 5
Tokyo, Japan 7 7
Seoul, Korea Republic 8 8
Tel Aviv, Israel 9 14
Shanghai, China 10 10