The most expensive place to live in 2012 is Tokyo based on overall cost of living. Zurich is the most expensive based on the cost of living excluding housing, education, healthcare and transport, where many companies cover these costs on behalf of the employee.
The latest international cost of living rankings are based on data collected during the past 3 months for 768 international locations, covering every country world-wide.
The cost of living data collected is representative of an expatriate lifestyle, while the components of COL are prices for fixed quantities of the same goods and services, 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 153.65, followed by Hong Kong with 144.18, and Zurich with 139.57. 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 26 locations, Europe 14, the Americas 8, and Africa 2. The most expensive city in the Middle East is Abu Dhabi ranked 74, while in South Asia it is Colombo ranked 345.
The top 50 Most expensive locations to live - Overall Cost of Living & All Baskets:
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. 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 58.63, Hong Kong 42.31 (dropping all the way to rank 187) and Zurich 64.51. For an expatriate, where these benefits are provided for them, Zurich is the most expensive city to live. Of the top 50 most expensive places to live based on the cost of living excluding housing, education, healthcare and transport, Europe has 19 locations, the Americas 16, Asia-Pacific 10, and Africa 5. The most expensive city in the Middle East is Manama ranked 58, while in South Asia it is Kathmandu ranked 484. The top 50 Most expensive places to live - Excluding Housing, Education, Healthcare and Transport Baskets:
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 22 locations in the top 50 based on the overall cost of living index and 35 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 28 places in the top 50 based on the overall cost of living index but only 15 out of 50 places based on the cost of living excluding housing, education, healthcare and transport, of the 15, 8 are in Australia and Japan. 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. The top 20 Most expensive places to live in Asia-Pacific - Overall Cost of Living & All Baskets:
The top 20 Most expensive places to live in Europe - Overall Cost of Living & All Baskets:
The top 20 Most expensive places to live in the Americas - Overall Cost of Living & All Baskets:
The top 20 Most expensive places to live in Africa - Overall Cost of Living & All Baskets:
The top 20 Most expensive places to live in the Middle East - Overall Cost of Living & All Baskets:
The top 20 Most expensive places to live in South Asia - Overall Cost of Living & All Baskets:
The top 10 Most expensive places - Alcohol & Tobacco Basket (Note Alcohol only where legally sold):
The top 10 Most expensive places - Clothing Basket:
The top 10 Most expensive countries - Communication Basket:
The top 10 Most expensive countries - Education Basket:
The top 10 Most expensive places - Furniture & Appliances Basket:
The top 10 Most expensive places - Groceries Basket:
The top 10 Most expensive places - Healthcare Basket:
The top 10 Most expensive places - Household Accommodation Basket:
The top 10 Most expensive places - Miscellaneous Items Basket:
The top 10 Most expensive places - Personal Care Basket:
The top 10 Most expensive places - Recreation & Culture Basket:
The top 10 Most expensive places - Restaurants Meals Out and Hotels Basket:
The top 10 Most expensive places - Transport Basket:
The cheapest country in the world is Bhutan, followed by Cambodia and Uganda. Interestingly India and China no longer dominate the list of cheapest places to live. There are almost as many places in Africa, as there are in Asia-Pacfic and South Asia combined, that fall into the 50 cheapest places to live overall. The 50 cheapest locations to live include 15 places in Africa, 11 in Asia-Pacific, 11 in the Americas, 6 in South Asia, 4 in the Middles East, and just 3 in Europe. The 50 Least expensive places to live - Overall Cost of Living & All Baskets:
About Xpatulator.com’s Cost of Living Data
Xpatulator.com’s cost of living data is based on prices for the same quantity and quality of goods and services, representative of expatriate lifestyle, in each city. The data is collected and updated on a quarterly basis. The cost of living data is used by Xpatulator.com clients to calculate salary purchasing power parity, cost of living allowances, and customized (i.e. clients can select their own base city) cost of living indexes for expatriate assignments online, using Xpatulator.com’s 3 premium content calculators.
The 13 basket groups do not count equally and are weighted according to expatriate expenditure norms as follows (weighting percentage is in brackets):
1. Alcohol & Tobacco (2%): Alcoholic beverages and tobacco products. 2. Clothing (2.5%): Clothing and footwear products. 3. Communication (2%): Telephone, Internet, Mobile Contract and Calls. 4. Education (5%): Creche Fees, School Fees, College Fees, and Tertiary Study Fees. 5. Furniture & Appliances (5%): Furniture, household equipment and appliances. 6. Groceries (16.5%): Food, non-alcoholic beverages and cleaning materials. 7. Healthcare (5%): Doctor Consultation rates, Private Ward Rate, Prescription Medicine, and Private Medical Insurance Contributions. 8. Household (30%): Housing rental, utilities, local rates and residential taxes. 9. Miscellaneous (3%): Stationary, Linen and general goods and services. 10. Personal Care (3%): Personal Care products and services. 11. Recreation & Culture (6%): Books, Camera Film, Cinema Ticket, DVD and CD’s, Sports goods, Theatre Tickets. 12. Restaurants Meals Out and Hotels (2%): Dinner at Restaurant (non fast food), Hotel Rates, Take Away, Drinks & Snacks (fast Food). 13. Transport (18%): Public Transport, Vehicle Costs, Vehicle Fuel, Vehicle Insurance and Vehicle Maintenance.
About Xpatulator.com Xpatulator.com is the most comprehensive source of international cost of living information. We provide free international cost of living overviews and rank information covering 13 cost of living baskets and every country around the world as well as premium content calculators.
Founded in 2007, Xpatulator.com’s mission is to organize the world’s cost of living indices, exchange rates and relative hardship indices and make it accessible and useful to all.
The full January 2012 overall cost of living rank for all international locations using all 13 basket groups is as follows:
January 2012 Rank Country, City
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