Inflation puts pressure on cost of living in the world; see the most expensive cities in 2021

It hasn’t been an easy year for people around the world.

Supply chain blockages and shifts in consumer demand have pushed up the cost of living in many of our largest cities, according to new research published on Wednesday, and inflation is the highest on record for five years.

Against this backdrop, one city has seen change faster than most, jumping from fifth to first in this year’s World Cost of Living Index, released by the Economist Intelligence Unit (EIU).

The Israeli city of Tel Aviv topped the rankings for the first time, overtaking last year’s leader Paris, which is now tied for second with Singapore.

The EIU attributes Tel Aviv’s sharp rise in the index to increases in food and transportation prices and the strength of the Israeli shekel against the US dollar.

Everyday goods and services

The 2021 World Cost of Living Index tracks the cost of living in 173 global cities – 40 more than last year – and compares the price of more than 200 everyday products and services.

Data from the survey, conducted over three decades ago, is collected by the EIU’s global team of researchers each March and September.

The index is compared to New York City prices, so cities with the strongest currencies against the US dollar will likely appear higher in the rankings.

Zurich and Hong Kong occupy the four and five places, respectively, having occupied first place last year alongside Paris. New York, Geneva, Copenhagen, Los Angeles and Osaka complete the rest of the top 10.

The top rankings continue to be dominated by European and developed Asian cities. The lowest ranked cities are mainly in the Middle East, Africa and less affluent parts of Asia.

pandemic problems

The EIU reports that, on average, the prices of goods and services covered by the index increased by 3.5% year-over-year in local currency terms, compared with an increase of only 1.9% last year.

The much-reported global supply chain problems have contributed to price increases and the Covid-19 pandemic and social restrictions still affect production and trade around the world. With a new variant of the coronavirus currently causing widespread alarm, these problems aren’t going to go away anytime soon.

Rising oil prices have led to a 21% increase in the price of unleaded gasoline, reports the EIU, but there have also been large price increases in the recreation, tobacco and personal care categories.

The fastest growing city in 2021 was the Iranian city of Tehran, which jumped 50 places from 79th to 29th as US sanctions resulted in scarcity and higher prices.

The Syrian city of Damascus is once again considered the cheapest city in the world as its war-torn economy continues to struggle. Damascus and Tehran suffered from very high inflation in 2021, as did Caracas, Venezuela and Buenos Aires, Argentina.

More to come

Upasana Dutt, head of the EIU’s Worldwide Cost of Living, said in a statement: “Although most economies around the world are now recovering with the launch of Covid-19 vaccines, many major cities are still experiencing spikes in cases , leading to social restrictions. This disrupted the supply of goods, leading to shortages and higher prices.”

“We can clearly see the impact on this year’s index, with the rise in gasoline prices particularly sharp. But not all cities saw price increases. Many of the cities at the bottom of our rankings have seen prices stagnate or even fall, in part because their currencies have depreciated against the US dollar,” he says.

“In the coming year, we expect to see the cost of living rise even more in many cities as wages rise in many sectors. However, we also expect central banks to cautiously raise interest rates to contain inflation. Therefore, price increases should start to moderate from this year’s level.”

See the list of the most expensive cities in the world to live in in 2021:

1. Tel Aviv, Israel
2. (tie) Paris, France
2. (tie) Singapore
4. Zurich, Switzerland
5. Hong Kong
6. New York City, New York
7. Geneva, Switzerland
8. Copenhagen, Denmark
9. Los Angeles, California
10. Osaka, Japan
11. Oslo, Norway
12. Seoul, South Korea
13. Tokyo, Japan
14. (tie) Vienna, Austria
14. (tie) Sydney, Australia
16. Melbourne, Austrália
17. (tie) Helsinki, Finland
17. (tie) London, UK
19. (tie) Dublin, Ireland
19. (draw) Frankfurt, Germany
19. (draw) Shanghai, China

(Translated text. Click here to read the original, in English)