March 3, 2015 – The Republic has been named as the priciest global city for the second year running, according to a survey by the Economist Intelligence Unit meant to help companies calculate relocation costs for expatriate staff.
“The Worldwide Cost of Living survey enables human resources line managers and expatriate executives to compare the cost of living in 140 cities in 93 countries and calculate fair compensation policies for relocating employees,” said the EIU earlier today. “The purpose of a cost of living allowance is to reimburse employees for excess living costs resulting from a foreign assignment.”
A similar study by Employment Conditions Abroad (ECA) International published in December ranked Singapore the 26th most expensive location for expatriates in the world.
The EIU survey compares the cost of living in US dollars between 133 cities worldwide and uses New York as a base city. The cost of living includes the cost of more than 160 products and services, ranging from food, toiletries and clothing to domestic help, transport and utility bills. In total, more than 50,000 individual prices are collected.
Analysts noted that changes in the ranking from year-to-year also depend significantly on currency movements, and not only price changes in the country. For example, the appreciation of the Singapore dollar against other currencies actually depreciates purchasing power in other currencies and raises cost of living here in terms of their currencies
Basic groceries in Singapore were found to be 11 per cent more expensive than in New York, while Singapore was the most expensive city for clothes – on par with Seoul – with prices more than 50 per cent higher than New York.
Singapore’s COE system also results in transport costs almost three times higher than that of New York, said the report.
The top five in the survey remained unchanged this year, with Paris, Oslo, Zurich and Sydney making up the rest of the top five in that order. In the top 10 are two other Asian cities, Hong Kong at ninth, and Seoul in South Korea at tenth.
However, Japan’s Tokyo, which was the world’s most expensive city in 2013, has now fallen to 11th place due to low inflation and a weak yen. Algiers in Algeria is the cheapest city in the world, while Indian cities make up four of the six cheapest.
The authors of the report noted that an unchanged top five is a “very rare” occurrence for the survey, given “significant global drivers that are impacting the cost of living everywhere”. For example, Singapore was fourth in the table midway through 2014, according to the report.
Said Mr Jon Copestake, Chief Retail & Consumer Goods Analyst and editor of the report: “A look at the data six months ago would have shown a different top five, and things are changing quickly, especially with the fall in oil prices. Rebasing the survey to today’s exchange rates would put Zurich top, highlighting how fluid the global cost of living has become.”
In the FAQ segment of the report, the EIU notes that currency fluctuations will impact how the cost of living compares between cities. “As currencies strengthen and weaken against each other, the relative cost of living will change between cities—even where price levels remain constant,” it said. Singapore’s full-year inflation rate for 2014 came in at 1 per cent, down from 2.4 per cent the previous year.