Mercer Human Resource Consulting's
Worldwide Cost of Living Survey 2006
Highlights::
Moscow replaces Tokyo as world's most expensive city;
Asuncion in Paraguay is the cheapest
Most Eastern European cities have dropped sharply in the rankings
Many US cities have risen in the rankings due to the strength of the dollar
In-depth findings:
Moscow has replaced Tokyo as the world's most expensive city, according to the latest Cost of Living Survey from Mercer Human Resource Consulting, the global leader for HR and related financial advice. Seoul is in second place, climbing three places since last year. Tokyo moves down two positions in the rankings to take third place, followed by Hong Kong. Asuncion in Paraguay remains the least expensive city in the survey.
With New York as the base city scoring 100 points, Moscow scores 123.9 and is nearly three times costlier than Asuncion, which has an index of 43.5.
Mercer's survey covers 144 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. It is the world's most comprehensive cost-of-living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.
"We have seen significant shifts in the cost-of-living rankings over the past few years, reflecting a changing global market. 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," commented Rebecca Powers, a Senior Consultant with Mercer's international business. She added: "More companies are now sending employees on expatriate assignments, so there is a greater need to keep pace with the cost of living changes. Employers need to be proactive in managing their expatriate programs to ensure they receive a proper return on their investment and employees are compensated fairly."
There have been some significant changes in the rankings this year which are primarily due to exchange rate fluctuations, in particular the strengthening of the US dollar.
Europe
Moscow is the most expensive city in Europe and in the rest of the world, with a score of 123.9. "Steep accommodation costs have contributed to the city's high ranking, as the recent property boom has driven up rental prices for expatriates," said Anna Krotova, Senior Researcher at Mercer.
London is the second most expensive city in Europe and ranks in 5th position (score 110.6). "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 Ms. Krotova.
Other costly European cities include Geneva in 7th place (103), Copenhagen in 8th (101.1) and Zurich in 9th (100.8) - all have been pushed down one place this year. Oslo remains in 10th place with a score of 100 while St. Petersburg is in 12th position (99.7).
Ms Krotova commented: "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."
Kiev in Ukraine has moved up from 54th position to reach 21st place (score 89.8). This is mainly due to the appreciation of the local currency, the Hryvna, against the US dollar, together with general price increases. Many other Eastern European cities have dropped sharply in the ranking due to the devaluation of local currencies against the US dollar. For example, Prague has fallen 22 places to rank 50th with a score of 82.1.
Leipzig is Europe's cheapest city in 123rd position with a score of 68.1.
The Americas
New York remains the most expensive city in North America and climbs three places to 10th position (score 100). Currency appreciation is the main reason for this, although price increases in fuel and certain consumer goods have also contributed to New York's rise in the rankings. Other high-ranking cities include Los Angeles in position 29 (86.7), San Francisco in 34th place (85) and Chicago in 38th position (84.1). Washington DC takes 83rd place (77). Winston Salem is the cheapest US city surveyed, ranked 124th (66.7).
"The strengthening of the US dollar against the European and other major currencies is a large contributor to the rise of most US cities in the rankings," commented Ms Powers.
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. Toronto is the most expensive city in Canada and moves up from 82nd to 47th place (82.6). Ottawa remains the least expensive Canadian city but has climbed 32 places from 122nd to 90th (75.6).
Sao Paulo and Rio de Janeiro are the most expensive cities in Latin America moving up from 119th and 124th positions to 34th and 40th place respectively. These movements are due to the strong appreciation of the Brazilian Real against the US dollar (more than 20 %), which has occurred as a result of 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.
Asuncion in Paraguay remains the least expensive city globally, in 144th position with a score of 43.5. Other cheap cities include Buenos Aires, Montevideo and Caracas in 142nd place (score 54.8.), 138th (56.5) and 136th (57.2) respectively.
Puerto Rico has experienced high inflation during the last year which, together with the strength of the country's currency (US dollar), means San Juan is the costliest city in Central America and the Caribbean in 55th position (score 81.4). San Jose is the least expensive in 134th place (58.1). Santo Domingo in the Dominican Republic is in 126th position (65.3) and has dropped 27 places due to the depreciation of the Dominican Peso against the US dollar.
Asia
Three of the world's ten costliest cities are in Asia, with Seoul moving up from 5th to second place. While Tokyo has lost its title of the world most expensive city because of currency fluctuations between the Japanese Yen and the US dollar, it still ranks highly and takes third place. Hong Kong is in 4th position.
"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 Ms Krotova. Beijing is in position 14 (score 94.9) followed by Shanghai in 20th place (91.2).
Australasia
Auckland and Wellington have dropped in the rankings this year to positions 100 and 105 respectively (scores 72.9 and 71.1) due to the significant devaluation of the New Zealand dollar against the US dollar. Sydney is still the most expensive city in the region at 19th place with a score of 91.3. Melbourne occupies 74th place (78.8) while Brisbane is in 99th position (73.2).
Individual reports are produced for each city surveyed. For further information visit www.mercerhr.com/costofliving, or call Mercer Global Information Services in Geneva at +41 22 869 3000.
The figures for Mercer's cost of living comparisons are based on a survey conducted in March 2006. The 2006 comparisons are based on a similar survey conducted in March 2005. The information is used by governments and major companies to protect the purchasing power of their employees when transferred abroad. The choice of cities surveyed is based on the demand for corresponding data from companies and governmental organizations. Exchange rates used in cost comparisons: 1 GBP = 1.75 USD; 1 GBP = 1.46 EUR.
Mercer Human Resource Consulting is a global leader for HR and related financial advice and services, with more than 16,500 employees serving clients from more than 185 cities and 41 countries and territories worldwide. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific and London stock exchanges.
Contact: Anna Krotova (Geneva) +41 22 869 3087
Lydia Ruffles/Jackie Barber (UK Press Office) +44 20 7178 3513/3143 mercer.pressoffice @ mercer.com
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