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1040 Abroad

Cost of Living Falls in America, Rises in Western Europe

According to the latest insights from The Economist Intelligence Unit’s Worldwide Cost of Living index, factors including currency exchange rates, supply chain issues and the Covid-19 pandemic have had an impact

Published on November 18, 2020

New York Skyline New York Skyline. Photo: Pierre Blaché

The latest edition of the World Cost of Living (WCOL) index, a study compiled by The Economist Intelligence Unit, has revealed how the cost of living in cities around the world has been affected by the Covid-19 pandemic.

The WCOL report looks at prices related to ten categories: Recreation (including consumer electronics); Personal Care; Tobacco; Alcohol; Domestic Help; Transport; Groceries; Household; Utilities; and Clothing. These categories are compared for 133 world cities to create a list of the most and least expensive places to live.

The latest edition of the report found that during 2020, Zurich and Paris moved to the top of the list of the most expensive cities, joining Hong Kong which remained joint first. Singapore dropped from first to fourth, while Tel Aviv, Geneva and Copenhagen also rose up the list. Conversely, Osaka fell four places to joint fifth, while New York dropped three places to seventh, and Los Angeles fell one spot to tenth.

Looking at the reasons behind the price shifts, the WCOL report cites several factors. For example, the report suggests that local exchange rate movements played a part in the changes, explaining that by "September 2020, when our survey was taken, currencies were weakest in the Americas and strongest in Western Europe."

The report also cites supply chain issues, saying that shortages of goods including toilet paper and pasta have driven price rises. A general fall in disposable incomes due to the pandemic have also affected the report, with more consumers opting to save money and cut back on spending. The WCOL report also notes that changes in living circumstances, including more people staying at home, has had an impact.

Looking at the biggest movement in the ranking list, the cities that dropped the most places down the list (ie became cheaper) include Reykyavik, Sao Paulo, Rio de Janeiro, Bangkok, Moscow, Mexico City, Kiev, Istanbul, Nairobi and Lima. The cities that rose up the list by the most places (ie became more expensive), include Tehran, Perth, Guangzhou, Belgrade, Abidjan, Rome, Dusseldorf, Dakar, Brussels and Amsterdam.

Examining which categories of goods/services increased most in price, the biggest rises were seen in Recreation, Personal Care, Tobacco, Alcohol and Domestic Help. The only categories which saw a drop in costs were Utilities and Clothing.

Forecasting ahead, the report suggests that the current trends are expected to continue into 2021.

For more information from the report, go to www.eiu.com/n/campaigns/worldwide-cost-of-living-2020.




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