Cost of Living - Europe October 2012

Europe: Cost of Living Rankings for October 2012

The most expensive countries in Europe for expatriates to live in are: Switzerland; Monaco; United Kingdom; Norway; Liechtenstein
The most expensive cities in Europe for expatriates to live in: Zurich (Second most expensive in the world); Geneva; Monaco; London; Oslo
The cheapest country and city in Europe for expatriates to live in: Bucharest in Romania (764th most expensive in the world)

Which cities / countries drop in the ranking, and which moved up?

The biggest mover down the rankings is Kaliningrad in Russia, which has dropped to become the 324th most expensive location in the world.
The biggest mover up the rankings is Gibraltar, which has risen to be the 171st most expensive location in the world.

Reasons for this movement:

Kaliningrad is unusual in that it is sandwiched between the Baltic Sea, Poland, and Lithuania (EU member states), making it impossible to travel between Kaliningrad and the rest of Russia over land without crossing at least one EU state. While the global financial crisis impacted Kaliningrad negatively, it has gained from increasing trade with the countries of the EU resulting in increasing economic growth and rising industrial output. Kaliningrad is particularly expensive for furniture & appliances. For example a Blu-ray player is $167 on average while a 46 inch LED HD TV will likely cost you around $1,653. Dry cleaning a men’s 2 pc suit will cost on average $21.53, while an international newspaper averages $6.62.

Gibraltars economy is booming compared to countries in the region, mainly due to its relatively low level of tax. The cost of living can generally be compared to that of the UK rather than Spain. Water and electricity charges are higher than costs elsewhere, and property prices are much higher than those in neighbouring Spain mainly due to the limited space. Despite duty free shopping the logistical cost of importing the majority of goods also makes Gibraltar expensive, particularly for groceries and meals out. For example a kg of potato’s averages $1.90, 1 kg boneless, skinless, chicken breast $11.06, 1 kg cheddar cheese $10.75, and 1 dozen large eggs $7.93. A meal out for two people in a mid-range restaurant costs around $84.82.

Xpatulator’s Cost of Living rankings are released every quarter and measure the comparative cost of living for expatriates in 780 cities, covering every country worldwide. The cost of 13 basket groups with over 140 items are compared in each location, these include alcohol and tobacco, clothing, communication, education, furniture and appliances, groceries, healthcare, housing, personal care, recreation and culture, restaurants-meals-out and hotels, and transport.

Zurich as the most expensive city in Europe has an overall cost of living index of 134.23 compared to New York with an index of 100, and Tokyo with an index of 139.89. Zurich’s cost of living index is similar to cities such as Geneva, Hong Kong, and Luanda. Zurich is the most expensive city in Europe mainly because the Eurozone crisis has created a flight to safety in Swiss Francs, which are generally considered safer. The inflows have resulted in the Swiss Franc appreciating, and as a consequence prices have gone up compared to the Euro and the US Dollar.

Particularly expensive in Zurich are the following basket groups, groceries, healthcare, restaurants meals out and hotels, and transport. For example a 1 kg bag of apples averages $5.08 in Zurich, 1 kg boneless, skinless, chicken breast $32.65, 1 kg cheddar cheese $23.80, and a 500g loaf white bread $3.17. A private practice doctor visit for an uninsured patient is likely to cost $125 on average, and a private hospital stay, including nursing care, medications, diagnostic tests, food, and related costs will average $3,675 per day. A cappuccino (regular, medium) costs on average $5.14, while a meal out (for 2 mid-range restaurant) $103.40. The average price over the last year for highest available octane petrol / gasoline has been just over $2 per litre.

To provide an assignee, sent from a low cost of living country to a more expensive country, 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 below ranking shows the overall Cost of Living Rankings in Europe by city:

The below ranking shows the Cost of Living Rankings in Europe by city excluding housing, education, healthcare and transport basket groups:

Xpatulator.com Head of Client and Marketing Services Denise McManus comments that: “Expatriates should remember that all other things being equal, prices rise fastest in the places where talented people want to be, especially when combined with a sustained high demand for high level skills, where resources such as land are scarce.”

New York City is used as the base for the cost of living index rankings and the US dollar is used as the base currency. The cost of living data collected is representative of an expatriate lifestyle, where the local prices for fixed quantities of the same good and services at or near each location, and US dollar exchange rates are used. Prices in each location are affected by availability (i.e. supply and demand) as well as local pricing regulations and taxes on goods and services (e.g. premiums on luxury goods). 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 the host country. The cost of living has a significant impact on the purchasing power of an expatriate’s salary package.

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