Tel Aviv has been ranked the world’s most expensive city to live in, as a sharp spike in inflation has driven up the cost of a full range of goods and services around the world in the wake of the coronavirus pandemic.
According to the official ranking system compiled by the Economist Intelligence Unit (EIU), the Israeli city climbed five places over the past 12 months to take the unwanted title from the joint winners of Paris, Hong Kong and Zurich last year.
The French capital was tied second with Singapore, while Zurich and Hong Kong were in the remaining top five. New York was ranked sixth, Geneva was in seventh, and Copenhagen, Los Angeles and Osaka were in the top 10.
London has moved up three places to 17th in the annual rankings, Sydney has moved up from one to 14th and Melbourne has moved up from two to 16th.
The rise in Tel Aviv’s table was partly due to the strength of the national currency, the shekel, against the dollar, as well as increased prices for transportation and groceries.
It was the second most expensive city for alcohol and transportation, and fifth for personal care and sixth for entertainment. It ranks in the top third of all EIU’s major spending categories, a 5 point increase in its index from last year.
The dislocation of the global economy as it recovers from the stop-start effect of the pandemic-enforced lockdown this year played a big part in the shake-up of the rankings.
Energy and food prices in some countries have risen due to trade restrictions, labor shortages and ongoing supply chain constraints. The average price of one liter of unleaded petrol has increased by 21 per cent.
Data for 50,000 goods and services in 173 cities was collected in August and September as the prices of goods and commodities increased. Prices in local currency terms rose an average of 3.5% – the fastest inflation rate recorded in the past five years. The survey includes rental costs, but does not factor in property prices.
Upasana Dutt, head of worldwide cost of living at EIU, said: “We can clearly see the impact in this year’s index, especially with the rise in petrol prices,” adding that interest to central banks Rates are expected to rise cautiously, bucking inflation.
Forty new cities have been added to the rankings this year. The Scottish capital Edinburgh was the highest new entry on the chart, coming in at joint 27th place alongside high-cost cities such as Auckland and Minneapolis. Two other new cities – Stuttgart and San Diego – also entered the top 50.
Rome saw the biggest drop as it fell 16 places to 48, with a sharp drop in the price of groceries and clothing, especially. Bangkok and Lima were the second biggest movers in the ranking, with significant declines in all categories.
Tehran was the biggest climber, jumping 50 places to 29th after the re-imposition of US sanctions due to supply-side constraints, commodity shortages and rising import prices.
The average inflation figure does not include four cities with exceptionally high rates: Caracas, Damascus, Buenos Aires and Tehran.
Damascus was ranked the world’s cheapest city to live in, followed by Tripoli in Libya and Tashkent, the capital of Uzbekistan.