- Hong Kong, Zurich and Paris have topped a new list of the most expensive cities.
- Zurich and Paris overtook Singapore and Osaka.
- A weaker dollar has sparked a relative fall in costs in the Americas.
- The COVID-19 pandemic has reshaped demand for and prices of many items.
- Prices for consumer electronics have surged, while clothing prices have fallen.
- Tobacco and recreation saw the biggest price increases since last year.
- It’s predicted that price-conscious consumers will prioritize spending on staple items in 2021.
How much money we spend and on what is being extensively reshaped by the coronavirus pandemic.
That’s the conclusion of an annual index on the world’s most expensive cities, that saw Zurich and Paris displace Singapore and Osaka to join Hong Kong as the three priciest locations on the planet.
Cities in the Americas, Africa and Eastern Europe became less costly over the year, while those in Westerm Europe became relatively more expensive, in part reflecting a rise in European currencies against the US dollar. Upasana Dutt, who oversees the Worldwide Cost of Living report at The Economist Intelligence Unit, says some of the currency weakness was because the survey took place in September, when the Americas were suffering acutely from the pandemic.
Among 10 categories, tobacco and recreation – which includes consumer electronics – rose the most, while clothing costs fell.
“COVID-19 has had an impact on the way goods and services are used,” Dutt told a Zoom session to discuss the contents of the report. “Consumer electronics have seen the highest price increases since last year,” and this is not surprising given how much home working pushed up demand for laptops, she said.
The pandemic’s effects on the 2020 survey include: supply-chain problems, with shortages of items like toilet roll fuelling some price increases; government actions, with the imposition of some price controls or tax increases; falling disposable incomes; and changes in lifestyles – for example people spending more time at home.
The changes highlighted by the survey provide another glimpse into how far reaching the consequences of the crisis are likely to be. And there’s probably more to come, with the economic recovery likely to be “partial and uneven,” according to the International Monetary Fund, which also predicts that COVID-19 will increase inequality in emerging markets and developing economies.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
Recovery from the economic setbacks requires close cooperation between the public and private sectors, Christine Lagarde, President of the European Central Bank, told the World Economic Forum’s Pioneers of Change summit. She cited progress on developing a vaccine as a reason to be cautiously optimistic.
The price of staple goods remained stable and demand for online retail grew, the report says. What consumers see as essential has shifted, with meal-preparation kits replacing restaurant meals for many middle-class families.
Perhaps not surprisingly, one of the steepest increases in the index was in the recreation category, which includes a paperback book, a TV and a personal computer.
Among the cities, Tehran in Iran was the biggest mover up the rankings in US dollar terms, as US sanctions pushed up prices. Even so, costs in the city remain well below those in the three most expensive cities in the world, the report says.
Reykjavik in Iceland dropped down the rankings as inflation slowed and tourism – a major driver of the economy – fell off a cliff, Arindam Dey, director of the Economics Unit at The Economist Intelligence Unit said in the Zoom call.
Some of the biggest price drops were seen in Rio de Janeiro and Sao Paulo, where currency falls, acute suffering from the pandemic and higher poverty levels contributed.
Looking ahead, the report predicted that many of the price trends captured by the report will continue.
“With the global economy unlikely to return to pre-pandemic levels until 2022, spending will remain restricted and prices under downward pressure,” the report says. “Many price-conscious consumers will prioritise spending on staples, home entertainment and faster internet access. Big-ticket items, as well as clothing and out-of-home recreation, will continue to struggle.”