New York and Singapore have topped the list of the most expensive cities in the world in 2022. Image: Unsplash/Luca Bravo
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- New York and Singapore have been named the most expensive cities in the world in 2022 by the Economist Intelligence Unit.
- Prices in global cities are over 8% higher than in 2021, the sharpest rise for 20 years.
- But the global average masks eye-watering inflation in the hardest-hit places.
New York and Singapore have topped the list of the most expensive cities in the world in 2022, as global prices soar by more than 8%, making the cost of living in the world’s leading cities even less affordable for ordinary people.
Although the two cities are officially the most expensive places in the world to live, Caracas, Venezuela had the highest inflation rate of any city in 2022 at 132%, according to the Worldwide Cost of Living 2022 report from the Economist Intelligence Unit (EIU).
In Istanbul, prices rose by 86%, while in Buenos Aires inflation was running at 64% and 57% in Tehran. The overall global city inflation rate of 8.1% was the highest recorded by the survey since it began tracking prices of over 200 goods and services 20 years ago.
Kyiv in Ukraine was too unsafe to be surveyed in 2022 following Russia’s invasion of the country. But the survey shows the impact of the war on Russia as Moscow and St Petersburg climbed the rankings by 88 and 70 places respectively as a result of sanctions.
Moscow’s inflation rate hit 17.1% while St Petersburg's was 19.4%. The war in Ukraine has driven up energy prices by an eye-watering 29% in Europe as it ends its dependence on Russian gas. Overall global energy costs have gone up by 11%, the EIU says.
The cheapest cities
At the other end of the scale the cheapest cities were Tehran (where local currency prices were used instead of the official exchange rate against the US dollar), Tripoli and Damascus. The example of Tehran shows how much currency issues can affect a city’s ranking, as it was ranked much higher last year.
The index converts local prices to US dollars so the falling value of the euro caused five European cities, including Luxembourg and Stockholm, to be among those slipping down the index. Tokyo and Seoul also saw their rankings fall as a result of currency depreciation.
Tel Aviv, which was the most expensive city in 2021, was pushed into third place by the rise in prices in New York and Singapore, while Hong Kong and Los Angeles completed the top five most expensive cities in the world.
The EIU says the biggest driver of city price inflation is the cost of a litre of petrol which was 22% higher year on year when the survey was completed in September 2022. Because oil is priced in dollars, nations with weaker currencies fared the worst, EIU says.
That led to wide variations in petrol price rises, with the Sri Lankan city of Colombo witnessing a 189% increase and Istanbul 148%. Steep rises in utility and food prices were also recorded across all cities in the survey.
Lower inflation ahead?
Based on trends from the 172 cities in the survey, EIU forecasts that global consumer price inflation will fall from an average of 9.4% in 2022 to 6.5% in 2023. “We expect this partial drop to be reflected in next year’s survey, bringing a little relief to hard-pressed households,” the survey team says.
The World Economic Forum’s 2022 Chief Economists Outlook agreed there would be a “dampening of inflationary pressures” in 2023 but added this would be at the cost of a sharp fall in global growth which would hit the least well-off hardest.
Almost three-quarters of the economists surveyed for the report thought a global recession was somewhat or extremely likely in 2023. “As policy-makers seek to rein in inflation they risk triggering recession and a spike in unemployment,” the report warned.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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