Mercer's 2009 Cost of Living Survey names Tokyo as the most expensive city in the world



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Currency movements main factor in deciding
ranking of most expensive cities in the world

A review of Mercer Consulting's Cost of Living Survey

7 July 2009: Tokyo has replaced Moscow as the most expensive city in the world for US expatriates according to the latest Cost of Living Survey from Mercer. Osaka is in second position, up nine places since last year, whereas Moscow is now in third place. Geneva climbs four places to fourth position and Hong Kong moves up one to reach fifth. Johannesburg has replaced Asunción in Paraguay as the least expensive city in the ranking. Similar research by ECA International puts Luanda (Angola) first, with Tokyo second. A report published by the Swiss Bank UBS says Oslo was the world's most expensive city, followed by Zurich and Copenhagen.

The fundamental flaw of all cost surveys is that they convert local prices into US dollars, which means that any changes are as much the result of currency fluctuations as of price inflation. In surveys by ECA, UBS, Mercer and EIU the cost of living in cities outside the US dollar zone becomes more expensive if the dollar weakens against local currencies even when prices remain unchanged or indeed fall. A good example are cities in the United Kingdom. During the past two years the pound sterling has both weakened against the US dollar and the euro - from $2.1 to $1.6 and from €1.5 to €1.16. Therefore London and other British cities have become considerably less expensive for anyone travelling to the UK from Europe or the US, while at the same time the cost of many imported items, including gas and oil, increased due to the diminished purchasing power of the pound.

In Mercer’s 2009 survey, New York is used as the base city for the index and scores 100 points, all cities are compared against New York and currency movements are measured against the US dollar. Tokyo scores 143.7 points and is nearly three times as costly as Johannesburg with an index score of 49.6. The survey covers 143 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.

The world's most expensive big cities
(The index is based on cost of living expressed in US dollars. Therefore, if the dollar weakens against the local currency of a city, the city becomes more expensive and moves up the index, even if prices expressed in local currency remain the same or even go down.)

Rank 2009
Rank 2008
City
Country
Score 2009
Score 2008
1
2
Tokyo Japan
143.7
127
2
11
Osaka Japan
119.2
110
3
1
Moscow Russia
115.4
142.4
4
8
Geneva Switzerland
109.2
115.8
5
6
Hong Kong Hong Kong
108.7
117.6
6
9
Zurich Switzerland
105.2
112.7
7
7
Copenhagen Denmark
105.0
117.2
8
22
New York City USA
100.0
100.0
9
20
Beijing China
99.6
101.9
10
13
Singapore Singapore
98.0
111.3
11
10
Milan Italy
96.9
98.3
12
24
Shanghai China
95.2
109.4
13
12
Paris France
95.1
118.3
14
4
Oslo Norway
94.2
79.3
15
89
Caracas Venezuela
93.3
125
16
3
London UK
92.7
105
17
14
Tel Aviv Israel
91.9
103.9
18
16
Rome Italy
91.2
101.1
19
21
Helsinki Finland
90.5
89.3
20
52
Dubai UAE
90.1
102.3
21
19
Vienna Austria
89.3
86.3
22
61
Shenzhen China
89.0
87.5
=23
55
Los Angeles USA
87.6
83.9
=23
70
Guangzhou China
87.6
103.9
25
16
Dublin Ireland
87.4
85.7
26
65
Abu Dhabi UAE
86.7
95.1
27
34
Douala Cameroun
86.1
97
28
25
Athens Greece
85.9
97
29
25
Amsterdam Netherland
85.7
90.6
30
45
Bratislava Slovakia
84.8
79.3
31
89
White Plains USA
84.7
95.9
32
30
Lagos Nigeria
84.6
82.2
33
74
Tehran Iran
84.1
89.6
=34
51
Abidjan Ivory Coast
82.5
92.2
=34
41
Dakar Senegal
82.5
81
=34
78
San Francisco USA
82.5
96.7
37
28
Madrid Spain
82.1
91.3
=38
43
Luxembourg Luxembourg
82.1
95.2
=38
31
Barcelona Spain
82.1
86.8
40
57
Algiers Algeria
81.7
81.4
=41
77
Honolulu USA
81.6
92.9
=41
39
Brussels Belgium
81.6
80.8
=41
80
Beirut Lebanon
81.6
90.7
44
44
Almaty Kazakhstan
81.5
82
45
75
Miami USA
81.4
103.1
46
18
St Petersburg Russia
81.3
93.1
47
37
Munich Germany
81.2
92.5
48
40
Frankfurt Germany
80.9
93
49
38
Berlin Germany
80.8
80.3
50
84
Chicago USA
80.7
117.7
Research by Mercer Consulting

Similar research by other organisations:
| ECA's most expensive cities | UBS' most expensive cities | EIU's most expensive cities |


Mercer's 2009 Cost of Living Survey
A significant reshuffle of cities can be observed in this year’s ranking, mainly due to considerable currency fluctuations worldwide. The majority of European cities moved down in the ranking with Warsaw experiencing the most dramatic change, plummeting 78 places from 35th to 113th. London and Oslo, both previously in the top 10, have dropped 13 and 10 places respectively. The same trend can be seen in Australia, New Zealand and India. Sydney has dropped 51 places from 15th to 66th and Mumbai has slipped down to 66th from 48th place.

Cities in the US, China, Japan and the Middle East have surged in the ranking. New York is a new entry in the top 10, jumping from 22nd to 8th place, and so is Beijing, now in 9th place, up from 20th in 2008. Japan now has two cities in the top 10 and Dubai has climbed 32 places to reach 20th.

Europe
In third place and with an index score of 115.4, Moscow remains the most expensive city in Europe for expatriates. However, a dramatic depreciation of the rouble against the US dollar has led to a sharp fall in the city’s index score compared to 2008 (142.4). Accommodation costs also started to decrease at the end of last year after a sharp increase in the first part of 2008. The next European cities in the ranking are Geneva and Zurich in fourth and sixth place, up from eight and ninth respectively. Copenhagen remains in seventh, and both Milan and Paris drop one place to 11th and 13th.

European cities have experienced some of this year’s steepest falls in the ranking, with Warsaw plummeting from 35th to 113th and Glasgow (129th place) and Birmingham (125th place) in the UK falling 60 and 59 places respectively. German and Spanish cities all fell between eight and 11 places, whereas cities in Sweden, Ukraine, Czech Republic, Romania and Hungary all fell between 36 and 48 places.

Oslo and London, both previously in the top 10, are now in 14th and 16th place respectively. “The decline of rental prices both in Oslo and London, coupled with the fall in the value of British pound and Norwegian krone against the US dollar, have caused these cities to plummet in the ranking,” said Ms Constantin-Métral.

The Middle East
While the vast majority of European cities have fallen in the ranking, most Middle Eastern cities have experienced a reverse trend. Both Dubai and Abu Dhabi have risen significantly in the ranking, moving from 52nd to 20th and 65th to 26th respectively. This is mainly due to the UAE dirham being fixed to the US dollar. Tel Aviv remains the most expensive city in the Middle East, although it is the only one in the region to move down in the ranking, from 14th to 17th.

Africa
Most African cities moved up in this year’s ranking, although their index scores have decreased. Cairo jumps a substantial 44 places to 57th as the Egyptian pound fared well against the US dollar. The sharp decrease of the South African rand against the US dollar has caused Johannesburg to slip to bottom position.

The US and Canada
Due to the strengthening of the US dollar, all cities in the US have experienced a rise in this year’s ranking. New York remains the highest ranking city in the region and has also joined the global top 10 list this year, jumping from 22nd to eighth place. Los Angeles is up 32 places to 23rd and Washington is up 41 places to 66th. Canadian cities have slipped down the index with its highest ranking city Toronto down 31 places to 85th. Ottawa drops 36 places to 121st and Montreal is now in 103rd place, down from 72nd in 2008.

Latin America
In 15th place and up 74 places from 2008, Caracas in Venezuela is the top ranking city in South America. Sao Paolo and Rio de Janeiro have experienced a reverse move, plummeting from 25th to 72nd and 31st to 73rd respectively, Similarly, Bogota has moved down from 87th to 120th place. Buenos Aires has climbed 26 to reach 112th place. “Although the Argentine peso has lost value against the US dollar, the high inflation rate observed on goods and services have caused Buenos Aires to rise in the rankings,” said Ms Constantin-Métral.

Asia
Tokyo moves up one place in the ranking to become the most expensive city for expatriates both in Asia and globally. The Japanese yen has strengthened considerably against the US dollar which also lifts Osaka into second place from 11th in 2008. Hong Kong follows in fifth place and Singapore has moved up three places to reach 10th. In 140th place, Karachi continues to be the least costly city in this region – up one place from last year.

The Indian rupee made a significant loss against the US dollar last year and all the Indian cities have moved down the ranking as a consequence. New Delhi moves from 55th to 65th place and Mumbai drops from 48th to 66th.

Chinese cities experienced the reverse effect as the Chinese renminbi performed relatively strongly compared to most other currencies. Beijing is in ninth place, having moved up 11 places to join the global top 10. Shanghai, Shenzhen and Guangzhou follow in 12th, 22nd and 23rd place respectively.

Australia and New Zealand
Cities in this region have taken a significant plunge in the ranking following a dramatic depreciation of the Australian and New Zealand dollars against the US dollar. Sydney remains the most expensive city for expatriates in this region but has dropped from 15th to 66th. Melbourne follows in 92nd, down from 36th. Auckland has moved down to 138th place from 78th and Wellington follows in 139th down from 93rd.

Methodology
The figures for Mercer’s cost of living and rental accommodation costs comparisons are based on a survey conducted in March 2009. The 2009 comparisons are based on a similar survey conducted in March 2008. The information is used by governments and major companies to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on the demand for corresponding data from companies and governmental organizations.

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