Cities in the UK and across the Eurozone have jumped by an average of 42 places in the ranking of the most expensive cities in the world, according ECA International.
Central London has risen 23 places in the past year, to 109th place, having dropped out of the top 100 last year for the first time in over a decade. Thanks to the strength of the euro, 18 additional European cities have entered the top 100 – many for the first time in four years – meaning Europe now makes up almost a third (30%) of the world’s most expensive cities.
Steven Kilfedder, Production Manager for ECA International, said: “In our analysis of the cost of living in cities around the world Central London dropped as many as 93 places after Brexit, reaching 139th place in September 2017. The pound’s gradual recovery has caused a rise in the cost of living for expats across the UK. Belfast remains the cheapest city in the UK and 164th in the global table.”
The Cost of Living Survey compares a basket of like-for-like consumer goods and services commonly purchased by international assignees in 475 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.
Global top 20 most expensive locations for expatriates
Cost of butter surges by up to 28% in Europe
Of 164 shopping basket items analysed in the report, the price of butter has seen the most notable increase across Europe in the past year. Prices have increased by an average of 11% across Europe, compared to just a two percent increase the previous year.
“Due to milk production growing at a slower rate than anticipated, wholesale butter prices have risen in the past year, which has been fed through to the expense of the consumer. Our analysis shows that the price of butter in Prague, Vienna and Warsaw is considerably higher having increased by up to 28%. For those hoping to make their own pastries in Vienna for example, butter now costs more than £2.30 for 250g,” explained Kilfedder.
Moscow expensive but bargains can be found for football fans
While Moscow is generally far more expensive than all UK cities – ranked the 54th most expensive city in the world – football fans visiting the country will still find some bargains.
“Although Moscow can be particularly costly for expats, football fans heading to the World Cup this month will be pleasantly surprised to find that public transport costs are much lower, and eating out will be cheaper for Brits. However, they should expect London prices for drinks,” explained Kilfedder.
Hyperinflation makes Caracas, Venezuela, the most expensive city in the world
Inflation in Venezuela has rocketed over the past year causing a significant hike in the cost of living. Caracas, Venezuela now tops ECA’s list of the most expensive cities in the world, overtaking Hong Kong, all cities in Switzerland, and last year’s most expensive location, Luanda.
Kilfedder said, “The economic situation in Venezuela has become increasingly volatile with inflation reaching an astounding 7,000% in the year to March 2018 and 1,800% over the last six months alone. The cost of goods has increased exponentially as the economic and political situation has deteriorated and despite the plummeting value of the bolivar, Caracas sits at the top of our cost of living rankings.”
Contrastingly though, despite the enormous rates of inflation, Venezuela is home to the cheapest petrol in the world costing less than 1 US cent per litre.
Swiss cities make up four of the top five most expensive in the world
Zurich (2nd), Geneva (3rd), Basel (4th) and Bern (5th) all continue to demonstrate that Switzerland is one of the most expensive countries in the world, with the four Swiss cities maintaining a steady record of being within the top ten most expensive in the world for the past five years.
Kilfedder explained, “The four Swiss cities in our rankings have been among the top ten most expensive in the world for years despite very low or negative inflation for much of the time. A strong currency and particularly high prices for food are among the reasons why the country is so expensive for foreigners. However, despite the high prices, high salaries in the country mean locals are still well-off compared to their European counterparts.”
Cost of living in US cities decreases due to drop in value of US dollar
Although Manhattan (30th), Honolulu (40th) and New York City (46th) remain in the top 50 most expensive cities in the world, the drop in value of the US dollar has caused cities across the board in the US to fall in the rankings. Greenwich (105th), Las Vegas (107th) and Boston (108th) each fell out of the top 100 most expensive cities for the first time in four years. Copenhagen in Denmark (15th) has also overtaken Manhattan for the first time since 2014.
“The weakness of the US dollar in the face of slower than expected tightening of monetary policy has made the US cheaper for foreign workers and also made it more expensive for US citizens moving abroad,” said Kilfedder.
Lebanon, Qatar and Bahrain drop out of top 100 most expensive cities in the world
The drop in value of the US dollar has had a ripple effect on the cost of living in many countries around the world whose currencies are linked to it, including several in the Middle East. Lebanon, Qatar and Bahrain have dropped out of the top 100 most expensive cities in the world this year as a result.
The exception to this trend is the UAE as Dubai (60th) and Abu Dhabi (74th) remain in the top 100, both jumping a few places.
“Although expatriates in the UAE and Saudi Arabia may have gained from the drop in value of the local currencies, which are linked to the US dollar, the introduction of five percent VAT has pushed up prices of most goods and services, counteracting the effect of the US dollar. Expatriates in Saudi Arabia experienced a double hit to their pockets with petrol prices increasing by a hefty 127 percent in the past year,” explained Kilfedder.
Hong Kong drops as Chinese cities rebound
Hong Kong saw a significant drop in the rankings, falling from the second most expensive location in the world to 11th – its lowest position since 2015.
Kilfedder said, “Hong Kong has seen a significant drop in our cost of living rankings for overseas workers, falling behind some of their nearest Asian neighbours such as Tokyo, Seoul and Shanghai. The main reason behind the drop is the fall in value of the US dollar against which the Hong Kong dollar is pegged, over the last year.”
Every Chinese city included in the survey has seen a rise in their ranking from last year. Shanghai was the highest placed Chinese city on the list in 10th place overall.
Kilfedder said, “There has been a major rebound for the Chinese cities in our latest cost of living Survey. Last year we reported that Chinese locations had all dropped in the rankings but 12 months later the long-term upward trend has returned, and they have risen significantly. The stronger yuan pushed all locations up in our rankings, with Shanghai even overtaking their regional neighbour Hong Kong.”
Lifting of US sanctions not enough to stop Sudan economic crisis – Khartoum now the cheapest city in the world
Khartoum is ranked as the cheapest location in the world having experienced a significant drop in value of the Sudanese pound.
“Despite the US lifting sanctions on Sudan in late 2017, the hoped-for boost in investment has not materialised and the economy has deteriorated. Severe fiscal problems have led to large devaluations in the Sudanese pound and cuts in subsidies which have pushed up prices. Despite prices rising by more than 85% in the year, Khartoum – previously 10th most expensive in the world – is now the cheapest location in our report as goods are now much cheaper when bought with a hard currency,” concluded Kilfedder.
Six African locations re-entered the top 100 most expensive in the world this year, five of which have currencies linked to the euro. The sixth city, Harare in Zimbabwe (77th) has risen 30 places due to severe currency shortages causing a hike in prices. A total of 14 African locations are featured in this year’s top 100.