Cost of Living Rankings for April 2012

Posted on April 30, 2012 by Xpatulator

The most expensive place to live in April 2012 is Tokyo based on the overall cost of living, encompassing all cost of living baskets. Zurich is the most expensive based on the cost of living excluding the housing, education, healthcare and transport baskets. Many companies cover these costs on behalf of the employee while on international assignments.

The latest international cost of living rankings are based on data collected during the past 3 months for 780 international locations, covering every country world-wide.

ImageThe cost of living (COL) data collected is representative of an expatriate lifestyle. The components of the COL data are local prices for fixed quantities of the same goods and services in each location, local inflation and exchange rates. Prices in each location are affected by availability (i.e. supply & demand) as well as local pricing regulations and taxes on goods and services (e.g.premiums on luxury brands). Local inflation is usually representative of local price increases which in turn impacts an expatriates purchasing power in the host country. The exchange rate impacts both the price of imports to the host country and the expatriate assignment salary calculation between the home and host country. The cost of living has a significant impact on the purchasing power of an expatriate’s salary package.

As the overall most expensive place to live, Tokyo has an overall cost of living index of 151.23, followed by Hong Kong with 145.93, and Zurich with 134.72. The overall index is comprised of 13 different basket groups. The assumption using the overall index is that everything is paid from the salary package. In addition, the cost of living calculations are weighted according to typical monthly international expatriate spending patterns. The Household Accommodation Basket for example, has a weighting of 30%, while the Groceries Basket has a weighting of 16.5%. That means that an international expatriate who, for example, earns 10,000 would typically spend 3,000 (30% of 10,000) on housing and 1,650 on groceries.

Of the top 50 most expensive destinations to live based on the overall cost of living, Asia-Pacific has 28 locations, Europe 12, the Americas 8, and Africa 2. The most expensive city in the Middle East is Abu Dhabi ranked 72, while in South Asia it is Mumbai ranked 366.

The top 50 Most expensive locations to live – Overall Cost of Living & All Baskets:

  1. Japan, Tokyo
  2. China, Hong Kong
  3. Switzerland, Zurich
  4. Switzerland, Geneva
  5. Japan, Yokohama
  6. Switzerland, All Areas
  7. Australia, Sydney
  8. Japan, Osaka
  9. Venezuela, Caracas
  10. Australia, Canberra
  11. Japan, Nagoya
  12. Japan, Kobe
  13. Brazil, Sao Paulo
  14. Japan, Kyoto
  15. Japan, Kawasaki
  16. Australia, Perth
  17. Australia, Melbourne
  18. China, Shanghai
  19. Singapore, Singapore
  20. Norway, Oslo
  21. Venezuela, All Areas
  22. Liechtenstein, Vaduz
  23. Brazil, Rio de Janeiro
  24. Japan, Fukuoka
  25. United Kingdom, London
  26. Norway, All Areas
  27. Angola, Luanda
  28. Russia, Moscow
  29. USA, New York (Manhattan) NY
  30. Liechtenstein, All Areas
  31. Australia, Brisbane
  32. Japan, All Areas
  33. Denmark, Copenhagen
  34. Japan, Sapporo
  35. New Zealand, Wellington
  36. Angola, All Areas
  37. USA, New York (Brooklyn) NY
  38. New Zealand, Auckland
  39. Denmark, All Areas
  40. Papua New Guinea, Port Moresby
  41. Brazil, Brasilia
  42. Korea Republic of, Seoul
  43. Australia, Adelaide
  44. Korea Republic of, Daegu
  45. Korea Republic of, Incheon
  46. Australia, All Areas
  47. USA, Honolulu HI
  48. Taiwan, Taipei
  49. Korea Republic of, Busan
  50. Monaco, Monaco
In many international assignments, basket groups such as housing, education, healthcare and transport are provided for by the employer, either in kind or in the form of an allowance over and above the salary. The reason why we would exclude these items, is to calculate the cost of living difference only for those items an expatriate would be responsible for paying for. If we take these basket items out of the cost of living calculation, the cost of living indexes change accordingly. On this basis the current cost of living index for Tokyo becomes 57.91, Hong Kong 42.45 (dropping all the way to rank 184) and Zurich 62.08. For an expatriate, where these benefits are provided for them, Zurich is the most expensive city to live based on what they would typically spend their salary on.
 
Of the top 50 most expensive places to live based on the cost of living excluding housing, education, healthcare and transport, Europe has 18 locations, the Americas 14, Asia-Pacific 13, and Africa 5. The most expensive city in the Middle East is Manama ranked 54, while in South Asia it is Kabul ranked 602.
 
The top 50 Most expensive places to live – Excluding Housing, Education, Healthcare and Transport Baskets:
 
  1. Switzerland, Zurich
  2. Switzerland, Geneva
  3. Russia, Moscow
  4. Switzerland, All Areas
  5. Brazil, Sao Paulo
  6. Venezuela, Caracas
  7. Japan, Tokyo
  8. Australia, Sydney
  9. Brazil, Rio de Janeiro
  10. Norway, Oslo
  11. USA, New York (Manhattan) NY
  12. Australia, Canberra
  13. Central African Republic, Bangui
  14. Norway, All Areas
  15. USA, New York (Brooklyn) NY
  16. Venezuela, All Areas
  17. Liechtenstein, Vaduz
  18. Australia, Melbourne
  19. Eritrea, Asmara
  20. USA, Honolulu HI
  21. Brazil, Brasilia
  22. Australia, Perth
  23. Denmark, Copenhagen
  24. Liechtenstein, All Areas
  25. Denmark, All Areas
  26. Solomon Islands, Honiara
  27. Eritrea, All Areas
  28. Russia, Vladivostok
  29. Monaco, Monaco
  30. Australia, Brisbane
  31. New Caledonia, Noumea
  32. Senegal, Dakar
  33. USA, New York (Queens) NY
  34. USA, San Francisco CA
  35. Azerbaijan, Baku
  36. Canada, Toronto
  37. France, Paris
  38. Russia, Kaliningrad
  39. Japan, Osaka
  40. Russia, St. Petersburg
  41. New Zealand, Wellington
  42. Italy, Rome
  43. Japan, Yokohama
  44. Angola, Luanda
  45. New Zealand, Auckland
  46. USA, New York NY
  47. USA, Hawaii All Areas HI
  48. USA, San Jose CA
  49. Russia, All Areas
  50. Australia, Adelaide
 
Switzerland and Japan dominate the rankings primarily due to their strong currencies which have made them relatively more expensive. Local inflation is far less of an influence on cost of living compared to changes in exchange rates. The impact of a strong currency is that imports become cheaper. For locally employed people, especially when purchasing imported goods and services, the cost of living may not seem to have a major negative impact. In fact overseas holidays become relatively cheap. However, it also means that Japan and Switzerland, as well as countries like Australia who have 6 cities in the top 50 based on overall cost of living, are relatively more expensive for those paying with foreign currency which impacts exports and the overall cost to an employer sending an assignee to work in these countries.
 
In addition to the impact of strong currencies, much of the developed world has historically embedded high cost of living structures that keep them amongst the most expensive places to live. Europe and America have 20 locations in the top 50 based on the overall cost of living index and 32 out of 50 places based on the cost of living excluding housing, education, healthcare and transport. The major factor contributing to this is the relatively higher level of pay in the developed world, particularly amongst lower level jobs. By contrast Africa, Asia-Pacific, the Middle East and South Asia have 30 places in the top 50 based on the overall cost of living index but only 18 out of 50 places based on the cost of living excluding housing, education, healthcare and transport.
 
To provide an assignee, sent to any of the most expensive countries, with a similar purchasing power to what they have in their home country, requires an adjustment to their assignment salary. The amount of adjustment depends on which country they come from. The larger the difference in cost of living, the larger the adjustment required to ensure a similar level of purchasing power in the host country.

About Xpatulator

Xpatulator.com is a website that provides international cost of living information and calculators that can help you determine cost of living indexes, cost of living allowances, salary purchasing power and international assignment packages to compensate for cost of living, hardship, and exchange rate differences.
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