Moscow is the most expensive place to live in July 2012 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 most expensive place to live based on the overall cost of living, encompassing all cost of living baskets is Hong Kong. The latest international cost of living rankings are based on data collected for 780 international locations, covering every country world-wide.
The 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. 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. For an expatriate, where these benefits are provided for them, Moscow 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 19 locations, the Americas 12, Asia-Pacific 12, Africa 6 and the Middle East 1. The most expensive city in South Asia is Mumbai ranked 570. The top 50 Most expensive places to live - Excluding Housing, Education, Healthcare and Transport Baskets:
The countries that dominate the rankings are mostly 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 they 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 21 locations in the top 50 based on the overall cost of living index and 31 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 29 places in the top 50 based on the overall cost of living index but only 19 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.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.
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