Geo-economics

Low on cash? These are the cheapest cities to live in

Scattered clouds are seen over Mumbai's skyline, India, June 2, 2015. India cut this year's forecast for monsoon rains to 88 percent of the long-term average, Earth Sciences Minister Harsh Vardhan said on Tuesday, raising fears of a drought in the country where nearly half of farmland lacks irrigation facilities. REUTERS/Danish Siddiqui - RTR4YFTM

After analysing a wide-range of data — from food and fuel costs to salaries — the EIU put together a ranking of the most expensive and cheapest cities in the world to live in. Image: REUTERS/Danish Siddiqui

Will Martin
Markets Reporter, Business Insider UK
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The Economist Intelligence Unit released its annual World Cost of Living report on Tuesday.

After analysing a wide-range of data — from food and fuel costs to salaries — the EIU put together a ranking of the most expensive and cheapest cities in the world to live in. It compares factors such as wages and the prices of more than 150 items — including bread, wine, cigarettes, and unleaded petrol.

The cost of living in each city is ranked in comparison with New York City, where New York receives an index score of 100, and one extra point equates to a 1% increase in living costs. This is called the WCOL (World Cost of Living) Index. Any city with a score of below 100 is cheaper than the Big Apple.

The top of the list is dominated by cities in Africa and the Indian subcontinent, but a handful in Europe are also among the cheapest. All cities on this list have a WCOL score of 51 or less.

T=16. Asuncion, Paraguay

With a score of 51, Paraguay's capital is the second cheapest place in South America to live, with only the chaotic, hyperinflation-stricken Caracas costing less.

T=16. Johannesburg, South Africa

Despite being at the heart of one of Africa's most developed economies, Johannesburg remains cheap by global standards. It has become relatively a little more expensive in 2017, scoring 51 compared to 50 last year.

T=16. Kathmandu, Nepal

Located deep in the Himalayas, Kathmandu has struggled in recent years after the city was decimated by a 7.8-magnitude earthquake in 2015. This has pushed the relative cost of living in the city downwards.

T=13. Tehran, Iran

Iran's capital Tehran has become steadily more expensive in the last few years. In 2011, the Cost of Living report ranked it as the world's 4th cheapest city.

T=13. Damascus, Syria

The war-torn city understandably ranks very low because of geopolitical instability. Large parts of the country have been left in ruins by nearly five years of civil war.

T=13. Caracas, Venezuela

Venezuela's economy is one of the most dysfunctional in the world, with hyperinflation wreaking havoc among the country's populace. Valuing goods is incredibly difficult, and many basic goods like toilet paper are frequently in short supply.

12. Lusaka, Zambia

Lusaka was the cheapest city in the world in 2016, but the EIU note that "the Zambian capital has subsequently climbed 11 places to 122nd owing to spiralling inflation and the stabilisation of the kwacha."

11. Pretoria, South Africa

One of a handful of African cities to make the list, according to a separate cost of living ranking, Pretoria is the second-cheapest major city in the world to rent a place to live.

T=8. Kiev, Ukraine

Kiev has "faced well-documented economic, political, security and infrastructural challenges," the EIU says. That has helped push prices in the Ukranian capital downwards.

T=8. Bucharest, Romania

The cost of everyday goods is pretty low in Romania's capital, despite the country being in the European Union. An average 1kg loaf of bread costs $1.64. That has dropped from $1.73 in 2016's ranking.

T=8. New Delhi, India

"Although South Asian cities traditionally occupy positions among the ten cheapest, they are no longer the cheapest cities in the world," the EIU says.

T=5. Algiers, Algeria

The EIU cites Algiers, along with Kiev, as one of the cities that has faced stability issues that have pushed the price of living downwards. It scored 45 on the WCOL index.A woman hangs her washing out to dry on her roof top in the old city of Algiers Al Casbah, Algeria.

T=5. Chennai, India

One of three Indian cities to make the top six on the EIU's ranking, Chennai is unmoved from last year's ranking.

T=5. Mumbai, India

Despite its role as a bustling metropolis, Mumbai is incredibly cheap. An average loaf of bread would cost the equivalent of $1. Only two cities on the list have cheaper bread.

4. Karachi, Pakistan

Food, transportation, and entertainment are relatively cheap. Housing is also very cheap, partly because of high crime rates.

3. Bangalore, India

"The Indian subcontinent remains structurally cheap," which is a deciding factor in Bangalore's position as one of the world's cheapest cities, the Cost of Living report notes.

2. Lagos, Nigeria

"The relative cost of living in Lagos has more than halved since 2008, which might signal renewed interest from foreign investors, with price levels so low by international standards," the report notes.

1. Almaty, Kazakhstan

"Almaty’s citizens may not feel that the city is getting cheaper; despite measures to control prices, Almaty has seen inflation approaching 20% during 2016. However local price rises have not completely offset a 50% devaluation in the tenge (the Kazakh currency), since it was allowed to float in August 2015," the EIU's report says.

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