ECONOMIST INTELLIGENCE UNIT
WORLD COST OF LIVING 2004
Published August 2004
Plunging dollar makes Europe costlier says Economist Intelligence Unit
Although local price conditions may not have changed, the continuing weakness of the US dollar and the strength of European currencies has pushed European cities further up the global cost of living rankings.
This is according to the Economist Intelligence Unit's latest Worldwide Cost of Living survey, which shows cities such as Paris and Oslo now challenging Tokyo and Osaka Kobe as the world's most expensive destinations. The bi-annual survey compares the cost of a representative basket of goods and services in dollar terms from over 130 cities worldwide to provide guidance for the calculation of executive allowances. The data quoted here used New York as a base index of 100 for comparisons.
Regional round up
cities rise significantly
Traditionally expensive cities from outside the eurozone such as Oslo and Zurich have been caught by cities such as Paris, which occupies joint third spot with Oslo. Vienna (10th) is the other eurozone city in the top ten. A strong pound has also seen London rising from 10th to 6th place. Portugal remains the cheapest eurozone country, with Lisbon (54th) being the only “old EU” city (ie excluding those in the ten new member-states) outside the top 50. Athens, home to the upcoming Olympic games, also offers good value as the second cheapest eurozone destination.
Transition economies surveyed ahead of their accession to the EU remain significantly cheaper than their West European counterparts. Moscow (33rd) is the most expensive East European city. With a cost of living of just over half that of New York, Romania’s Bucharest (113th) is the cheapest city in Europe.
US cities fall
while Latin America stabilises
Following a decline in recent years Latin American cities have generally found their positions stabilising, although they remain towards the bottom of the rankings. Mexico City (64th) has overtaken San Juan of Puerto Rico as the region’s most expensive city, despite falling eight places in the ranking itself. The continuing political and economic upheaval in Venezuela has made Caracas (131st) the region’s cheapest city falling 22 places to joint second from bottom in the overall rankings.
Australasia take the two-tier approach
Some of the biggest movers in the region (and the world) have been Australian cities. The strength of the Australian dollar and the aftermath of a spike in inflation caused by the 2000 introduction of a goods and services tax has seen a steady rise for Australian cities. Both Sydney (14th) and Melbourne (18th) have entered the top 20 thanks to a strong currency despite being ranked 40th and 43rd respectively last year.
Less developed Asian economies remain significantly cheaper, with Manila (131st) occupying the joint second from bottom spot in the overall rankings and 6 further cities offering a cost of living of less than half of that in New York.
pegging has biggest influence in Africa and Middle East
While economies in the Middle East with currencies pegged to the US dollar have seen the relative cost of living continue to slide, those in Africa pegged to the euro have seen relative costs rise. Abidjan in Cote D’Ivoire (29th) is the most expensive city in the region and the only African or Middle Eastern city in the top 50. Harare (122nd) has also risen slightly in the rankings as hyperinflation offsets the rapid devaluation of the Zimbabwean dollar.
Economist Intelligence Unit Worldwide Cost Of Living
Top 10 and Bottom 10 Rankings
*New York = 100
Worldwide Cost of Living survey available from the Economist Intelligence Unit.
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About the Economist Intelligence Unit
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of over 100 in–house editors and economists, and a global network of over 650 contributors, we continuously assess and forecast political, economic and business conditions in nearly 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.
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