Mercer's latest cost of living survey shows that it can cost more to send employees to work in Russia or Korea than locations such as Japan or Switzerland, which are traditionally perceived as the most expensive.

27 June 2006

AMSTERDAM - Moscow and Seoul are the most expensive cities in the world for expats to live in. Tokyo, last year's leader, is now ranked as the third most expensive city, reveals Mercer's Worldwide Cost of Living Survey 2006.

Mercer Human Resource Consulting attributes any significant changes in the rankings this year to exchange rate fluctuations, in particular the strengthening of the US dollar. 

However, in Moscow's case high accommodation costs have contributed to the city’s high ranking. "The recent property boom has driven up rental prices for expatriates," said Anna Krotova, Senior Researcher at Mercer.

Tokyo, although still ranking highly, dropped two places due to currency fluctuations between the Japanese Yen and the US dollar.

London is the second most expensive city in Europe, ranking in fifth position worldwide.  "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 Krotova. 

Eastern European cities drop in rankings, US cities rise

"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," Krotova said.

The survey shows that most Eastern European cities have dropped sharply in the rankings. For example, Prague has fallen 22 places to a rank of 50 with a score of 82.1. In contrast, many US cities have risen in the rankings due to the strength of the dollar

New York, which has risen to tenth place, remains the most expensive city in North America mainly due to currency appreciation. Price increases in fuel and certain consumer goods have also contributed. 

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 reports Mercer.

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 Krotova.  Beijing is ranked 14 followed by Shanghai with a ranking of 20.

In Australasia, Auckland has dropped to 100th place and Wellington to 105 due to the significant devaluation of the New Zealand dollar against the US dollar.  Sydney, still the most expensive city in the region, ranks at 19.

Latin American cities show sharp increase in COL

Sao Paulo and Rio de Janeiro are the most expensive cities in Latin America. Both have moved rapidly up the ranks. For instance Sao Paulo has jumped from a rank of 119 to 34th place. 

Mercer puts this down to the strong appreciation of the Brazilian Real against the US dollar, due to 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, Mercer reports. 

Mercer's survey, which takes New York as the base city, scoring 100 points, covers 144 cities across six continents.  The survey measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

For instance, Moscow, with a score of 123.9, is nearly three times costlier than the lowest scorer, Asuncion in Paraguay, which has an index of 43.5. 

"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 consultant with Mercer. "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 said.

Worldwide cost of living rankings 2006

[Copyright Expatica news 2006]