Moscow has replaced Tokyo as the world's most expensive city, according to the latest Cost of Living Survey from Mercer Human Resource Consulting. Seoul is in second place, climbing three places since last year. Tokyo moves down two positions in the rankings to take third place, followed by Hong Kong. Asuncion in Paraguay remains the least expensive city in the survey.
With New York as the base city with a score of 100 points, Moscow scores 123.9—nearly three times costlier than Asuncion, which has an index of 43.5. "Steep accommodation costs have contributed to Moscow’s high ranking, as the recent property boom has driven up rental prices for expatriates," said Anna Krotova, senior researcher at Mercer.
Mercer's survey covers 144 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world's most comprehensive cost-of-living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.
"We have seen significant shifts in the cost-of-living rankings over the past few years, reflecting a changing global market,” said Rebecca Powers, a senior consultant with Mercer's international business. “For many companies, it can now be more expensive to send employees to work in Russia or Korea than places like Japan or Switzerland which are often perceived to be more costly." She added: "More companies are now sending employees on expatriate assignments, so there is a greater need to keep pace with the cost of living changes. Employers need to be proactive in managing their expatriate programs to ensure they receive a proper return on their investment and employees are compensated fairly."
There have been some significant changes in the rankings this year that are primarily due to exchange rate fluctuations, in particular the strengthening of the US dollar. Following are some Survey highlights:
After Moscow, London is the second most expensive city in Europe, ranking in 5th position (score 110.6). "While prices have actually increased slightly over the last year, the strengthening of the dollar against the pound means London has dropped two places since last year," said Ms. Krotova.
Other costly European cities include Geneva in 7th place (103), Copenhagen in 8th (101.1) and Zurich in 9th (100.8)—all have been pushed down one place this year. Oslo remains in 10th place with a score of 100 while St. Petersburg is in 12th position (99.7).
Ms. Krotova commented: "The Euro has weakened against a number of currencies, for example the Canadian and US dollars, reducing the cost of living for expatriates in many European countries."
Leipzig is Europe's cheapest city in 123rd position with a score of 68.1.
New York remains the most expensive city in North America, climbing three places to 10th position (score 100). Currency appreciation is the main reason for this, although price increases in fuel and certain consumer goods have also contributed to New York's rise in the rankings. Other high-ranking cities include Los Angeles in position 29 (86.7), San Francisco in 34th place (85) and Chicago in 38th position (84.1). Washington, DC, takes 83rd place (77). Winston Salem is the cheapest US city surveyed, ranked 124th (66.7).
"The strengthening of the US dollar against the European and other major currencies is a large contributor to the rise of most US cities in the rankings," commented Ms. Powers.
Though still relatively inexpensive and benefiting from stable inflation, Canadian cities continue to move up the rankings due to the strength of the Canadian dollar. Toronto is the most expensive city in Canada and moves up from 82nd to 47th place (82.6). Ottawa remains the least expensive Canadian city but has climbed 32 places from 122nd to 90th (75.6).
Sao Paulo and Rio de Janeiro are the most expensive cities in Latin America moving up from 119th and 124th positions to 34th and 40th place, respectively. These movements are due to the strong appreciation of the Brazilian real against the US dollar (more than 20 %), which has occurred as a result of solid economic growth and increased foreign investment over the last two years, together with reduced public debt and high interest rates. In particular, the cost of international-standard accommodation has risen significantly in these cities.
Asuncion in Paraguay remains the least expensive city globally, in 144th position with a score of 43.5. Other cheap cities include Buenos Aires, Montevideo and Caracas in 142nd place (score 54.8.), 138th (56.5) and 136th (57.2), respectively.
Puerto Rico has experienced high inflation during the last year, which, together with the strength of the country's currency (US dollar), means San Juan is the costliest city in Central America and the Caribbean in 55th position (score 81.4). San Jose is the least expensive in 134th place (58.1). Santo Domingo in the Dominican Republic is in 126th position (65.3) and has dropped 27 places due to the depreciation of the Dominican peso against the US dollar.
Three of the world's ten costliest cities are in Asia, with Seoul moving up from 5th to 2nd place. While Tokyo has lost its title of the world most expensive city because of currency fluctuations between the Japanese yen and the US dollar, it still ranks highly and takes third place. Hong Kong is in 4th position.
"Chinese cities have moved up slightly in the rankings as the value of the yuan renminbi is now pegged to a number of currencies rather than just the US dollar," said Ms Krotova. Beijing is in position 14 (score 94.9) followed by Shanghai in 20th place (91.2).
Sydney is still the most expensive city in the region at 19th place with a score of 91.3. Melbourne occupies 74th place (78.8) while Brisbane is in 99th position (73.2).
Auckland and Wellington have dropped in the rankings this year to positions 100 and 105, respectively (scores 72.9 and 71.1), due to the significant devaluation of the New Zealand dollar against the US dollar.
Individual reports are produced for each city surveyed. For further information visit www.mercerhr.com/costofliving or call Mercer Global Information Services in Geneva at +41 22 869 3000.