Singapore has again been ranked as the most expensive city to live in, sharing first place with New York this year, according to the Economist Intelligence Unit (EIU).
This is the eighth time in 10 years that Singapore has topped the list. Singapore and New York dropped last year’s leader Tel Aviv to third place thanks to higher inflation and stronger currencies, the EIU reported in its new Global Cost Survey. of life in 172 cities.
According to the survey, the average price of goods in local currency jumped 8.1% this year, citing a survey the company conducted between August 16 and September 16. This is up from the 3.5% rise in prices reported by the EIU. Survey 2021.
Supply chain disruptions from China’s zero Covid policy and the Russian-Ukrainian war have been two of the main reasons for rising inflation this year, cost manager Upasana Dutt told CNBC. of life in the world at EIU.
“These two elements combined have put much more pressure on access to goods and the availability of products which represent [the] very basic needs of people. And those two things combined then led to inflation all over the world,” she said.
The research and analysis firm found that the biggest price increase was for gasoline. On average, gasoline prices increased by 22% compared to the previous year.
Oil prices were “very, very extreme” and “one of the highest we’ve ever had in the history of our data collection,” Dutt said.
High inflation in the United States
The US Federal Reserve has raised interest rates by 375 basis points since the start of the year on persistently high inflation, and a smaller rate hike could take place in December.
This gave the US dollar a significant boost, making goods more expensive.
“New York appears on this list for the very first time. So for the US dollar to strengthen so much and get to where it is now, that’s pretty unusual,” Dutt said.
Other U.S. cities also rose in the index due to greenback strength, EIU said.
Los Angeles fell from ninth place in 2021 to fourth this year. San Francisco – which didn’t make the top 10 last year – is now the eighth most expensive city to live in.
Six of the 10 cities that made the biggest jumps were also in the United States. They include Atlanta, San Diego and Boston.
Singapore’s first place comes as no surprise.
The country “has the highest transport prices in the world, due to strict government controls on car numbers. It is also one of the most expensive cities for clothing, alcohol and tobacco, thanks to its success as a premier location for business investment,” the report said. .
The city shared second place with Paris last year, so it’s “right where it’s always been,” Dutt said.
Fall of Japan and South Korea
Cities in countries whose currencies have plunged this year are among those that fell in the rankings.
Osaka in Japan is the 43rd most expensive city to live in, a sharp drop from its 10th position in 2021. And Busan in South Korea fell 25 places from last year and is now 106th, data shows. of the EIU.
“Japan and South Korea have also seen their currencies depreciate, while local currency inflation in these countries is quite subdued; this has lowered the Tokyo and Seoul indexes relative to New York,” indicates the report.
“The Bank of Japan felt that it would not artificially inflate the currency and would let it slide for prices to rise. This is one of the reasons why Osaka and Tokyo have really slowed down [in their rankings]“, said Dutt.
Although South Korea has taken steps to strengthen the won, “investors are still calling for safer currencies at this stage and the currency has fallen due to confidence levels,” she added.
Biggest leap: Russian cities
The Russian cities of Moscow and St. Petersburg rose 88 and 70 places respectively – the two cities with the biggest jumps, according to the survey. Moscow is now in 36th place and Saint Petersburg in 73rd.
“Capital controls, the abolition of imports and the conversion of European gas payments into rubles support the value of the local currency,” the EIU said.
On top of that, Western sanctions on Russia have led to “extremely high” inflation there, Dutt said.
Inflation outlook for 2023
The silver lining is that inflation should start to ease soon, the EIU said.
The firm predicts that global inflation will drop from an average of 9.4% this year to 6.5% in 2023.
“Steps have been taken to make sure inflation is reduced. So next year we’ll start to see the effect of that, so prices will be lower,” Dutt said. “Much lower than that, but how far is the question. We certainly expect that level of inflation to decline in 2023.”
Here are the most expensive cities in the world, according to the EIU’s 2022 Global Cost of Living Survey.
1. TIE — Singapore
1.TIE – New York
3. Tel Aviv
4. TIE—Hong Kong
4. TIE – Los Angeles
8. San Francisco
10. TIE — Copenhagen
10. TIE – Sydney
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