World's most expensive cities and economic realities
What's the story
As 2023 unfolds, the pervasive global cost of living crisis continues unabated, significantly impacting urban dwellers. According to the Economist Intelligence Unit's (EIU) annual Worldwide Cost of Living Index, the average cost of living surged by 7.4% this year, with a noteworthy spike in grocery prices. This increase remains markedly higher than historical trends, challenging the economic landscape for major cities worldwide.
Inflation
The dynamics of inflation
Eased supply chain issues, after China lifted COVID-19 restrictions in late 2022, have slowed utility price inflation. Meanwhile, grocery prices continue to rise as retailers pass on higher costs to consumers. According to CNN, Upasana Dutt, Head of Worldwide Cost of Living at EIU, predicts a decelerating inflation in 2024 due to rising interest rates and potential impacts from conflicts and extreme weather.
Impact
Impact on cities
Rising living costs affect cities differently, with some experiencing a more pronounced impact. The EIU identifies Singapore and Zurich as the world's most expensive cities in 2023. Zurich's ascent, attributed to a robust Swiss Franc and high prices for groceries and household goods, contributed to New York slipping to third place, tying with Geneva at fourth.
Rankings
Global city rankings
Hong Kong secures fifth place, making it the only other Asian city in the top 10, followed by Los Angeles at sixth and Paris at seventh. Tel Aviv and Copenhagen share eighth place, though the survey predates the Israel-Hamas conflict outbreak. San Francisco rounds off the top 10, highlighting a notable presence of U.S. cities.
Shift
Shifting trends
Russian cities Moscow and St. Petersburg witnessed substantial declines, plummeting 105 places to 142 and 74 places to 147, respectively, in this year's ranking. The depreciation of the ruble following Russia's invasion of Ukraine in February 2022 is identified as a pivotal factor. Additionally, Chinese cities, exemplified by Beijing, experience declines linked to the slow post-pandemic recovery and subdued consumer demand.
Disparities
Global disparities
Damascus, Syria, emerged as the world's most affordable city. Noteworthy cost differentials exist across regions, with U.S. cities leading in utility, domestic help, and tobacco costs. Meanwhile, Western European cities top the charts in recreation, transport, and household goods expenses. Asian cities stand out for their elevated grocery and alcohol prices, creating a mosaic of distinct economic challenges faced by residents globally.
Methodology
Methodology and exclusions
Delving into the methodology employed, the 2023 Worldwide Cost of Living Index extensively surveyed 173 major cities, meticulously comparing over 400 individual prices across 200 diverse products and services. It is pertinent to mention that Venezuela's Caracas was excluded from the study due to a staggering 450% surge in prices since 2022, reflecting exceptional economic circumstances.