By Veronica Inveen
Nov 25, 2020
PARIS AND ZURICH HAVE JOINED HONG KONG in a three-way tie at the top of the list of global cities with the highest cost of living, according to the Economist Intelligence Unit’s Worldwide Cost of Living study.
The survey measures the cost of 138 items in about 130 cities to determine its list. Both Paris and Zurich moved up four spots, hopping over Singapore and Osaka to reach the number one slot with Hong Kong, which previously held the title on its own.
In a challenging year, the global pandemic has impacted countries in varying ways, which is reflected in the results. The three top placeholders are followed by Singapore in fourth, Tel Aviv and Osaka tied in fifth, Geneva and New York City tied in seventh, and Copenhagen and Los Angeles tied in ninth.
“The COVID-19 pandemic has caused the U.S. dollar to weaken while Western European and North Asian currencies have strengthened against it, which in turn has shifted prices for goods and services,” Upasana Dutt, the head of Worldwide Cost of Living at the Economic Intelligence Unit, said in a statement. “The pandemic has transformed consumer behavior, as lockdowns and trends such as working from home have increased the prices of consumer electronics and meal-at-home kits have taken the place of restaurant dining for middle-class families.”
Overall, the cost of living rose by 0.3 points on average this year, as of when the survey was taken in September 2020. The rise in European currencies, as compared to the U.S. dollar, partly also made prices in Western Europe go up, while they came down in North and South America, Africa, and Eastern Europe.
The report also cites supply chain issues, with shortages of toilet paper and pasta leading to price increases. Compared to last year, the highest price increase was in the category of recreation, which includes electronics—likely due to the large number of people working from home. The homebound lifestyle has also led to a steep price decline in the category of clothing.
Tehran moved up on the list the most, springing from the 106th spot to the 79th, with significant cost increases—an outfall from the U.S. sanctions on the supply chain. Perth, Guangzhou, Belgrade and Abidjan all moved up 12 spots, too, becoming more expensive in 2020.
Prices in Reykjavik fell the most, dropping down 27 slots to 56, and Sao Paulo and Rio de Janeiro dropped 23 spots, which the report says is due to “weak currencies and rising poverty levels.”
“With the global economy unlikely to return to pre-pandemic levels until 2022, spending will remain restricted and prices under downward pressure,” Dutt said, noting that most people will likely continue to focus their spending on “staples, home entertainment, and faster internet access” in the coming year. “Although much will depend on the course of the pandemic, we expect many of the above price trends to continue into 2021.”