•London leaps five places to 15th most expensive city in the world
•Cost of a loaf of bread tripled over five years
•However – a meal for two is cheaper than other major European cities
Rising costs and a stronger pound have made London the 15th most expensive city in the world–up five places from last year–according to a new report published by the Economist Intelligence Unit (EIU), a world leader in country intelligence.
The Worldwide Cost of Living Report, a twice-yearly survey which looks at over 400 individual prices in 140 cities across 93 countries–ranked Tokyo in Japan as the most costly city, followed by Oslo (Norway), Osaka (Japan) and Paris (France). Karachi in Pakistan was revealed as the least expensive city to live in, with Bucharest in Romania the cheapest in Europe.
London is at its highest position since before the global economic downturn in 2008, when it sat in 7th place. While consumers’ wallets have been hit by rising commodity prices and VAT, the weaker economic situation on the continent has also pushed the cost of living up compared to Euro-zone cities. Manchester, ranked 53rd in the survey, is up from 61st place last year but remains over 20% cheaper than London.
The study reveals that the price for a loaf of bread in the UK capital has almost tripled in the last five years, with the supermarket price of a 1kg white loaf at 55 pence in 2006, and to £1.44 now.
So-called "sin-taxes" have also affected the cost of living. The supermarket price of a litre of local beer has risen nearly 50% from £1.28 to £1.90 in the last five years. (The French have been hit even harder in this area, with the price of beer jumping 71% to €3.00 (£2.63) per litre.) Cigarette prices in London also rose 25% to £6.58 for a packet of 20.
However, the report shows that, among major European cities, London offers value for money in some areas. Those who were able to get tickets for next years Olympics will be heartened to see that eating out in the capital is accessible, with a meal for two costing £68.00. This compares to £183.86 in Madrid, £144.46 in Rome, and £140.86 in Paris. In this category Moscow has seen a huge jump, with a meal costing £143.49 now compared to £49.15 five years ago–an increase of almost 300%.
Jon Copestake, economist at the Economist Intelligence Unit adds:
“Normally, with the economic downturn and austerity measures in place, weak consumer demand will dampen price movement. However, we are still seeing inflation from rising commodity prices and other measures like increased VAT feeding through into the shopping basket of consumers.”
The report gives people access to compare the cost of living indices between 140 different cities using one city as base and another as host for example, from London to Berlin or Moscow .
A summary of the full report is available on the EIU website.
About the Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is the world's leading resource for economic and business research, forecasting and analysis. It provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organisations around the globe, inspiring business leaders to act with confidence since 1946. EIU products include its flagship Country Reports service, providing political and economic analysis for 195 countries, and a portfolio of subscription-based data and forecasting services. The company also undertakes bespoke research and analysis projects on individual markets and business sectors. More information is available at www.eiu.com
The EIU is headquartered in London, UK, with offices in more than 40 cities and a network of some 650 country experts and analysts worldwide. It operates independently as the business-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs.
About the survey
The Worldwide Cost of Living is a bi-annual Economist Intelligence Unit survey that over 400 individual prices across 160 products and services in 140 cities in 93 countries. The survey itself is a purpose built internet tool designed to calculate cost-of-living allowances and build compensation packages for expatriates and business travelers. It incorporates easy-to-understand comparative cost of living indices between cities. The online interactive survey allows for city to city comparisons, but for the purpose of this report all cities are compared to a base city of New York, which has an index set at 100.
More than 50,000 individual prices are collected in each survey round conducted each March and September and published in June and December. EIU researchers survey a range of stores: supermarkets, mid-priced stores and higher priced specialty outlets. Prices reflect costs for more than 160 items—from food, toiletries and clothing, to domestic help, transport, and utility bills—in each city. These are not recommended retail prices or manufacturers’ costs; they are what the paying customer is charged.
Prices gathered are then converted into a central currency (US dollars) using a prevailing exchange rate and weighted din order to achieve comparative indices. The cost-of-living index uses an identical set of weights that is internationally based and not geared toward the spending pattern of any specific nationality. Items are individually weighted across a range of categories and a comparative index is product using the relative difference by weighted item. The main weighted survey categories and their aggregate weight are as follows:
Shopping basket: 25.0%
Alcoholic beverages: 3.5%
Household supplies: 4.5%
Personal care: 4.0%
Domestic help: 3.5%
Recreation & entertainment: 18.0%
Cities are compared on a base and host location basis, where the index for a base city is set at 100 and the index of the host city is set as a proportion of this. In the case of this report the base city is set as New York.
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