Paris And Zurich Displace Singapore And Osaka, Joining Hong Kong As The World’s Most Expensive Cities
The Economist Intelligence Unit (EIU) reveals the world’s most expensive cities, assessing COVID-19’s impact on global prices and income:
- Hong Kong remains the only Asian city in the top spot, with Paris and Zurich displacing Singapore and Osaka to become the most expensive cities in the world
- Singapore and Osaka fell to fourth and fifth ranks, respectively, due to deflationary pressures as a result of shrinking domestic demand and government action
- Most Chinese cities have risen largely due to the US-China tech war which has tested the resilience of supply chains and raised consumer prices
- The EIU expects many of these price trends to continue into 2021, as spending remains restricted and prices are subjected to downward pressure
Hong Kong, Paris and Zurich are the world’s most expensive cities, according to The EIU's 2020 Worldwide Cost of Living (WCOL) survey. The survey, which compares the price of a basket of 138 items in about 130 cities around the world, sees the two European cities gain four places over their previous ranking to overtake Singapore and Osaka.
Singapore and Osaka, which have been dislodged from their joint-first with Hong Kong, find themselves at fourth and fifth ranks, respectively, with Osaka tying with Tel Aviv.
The movement of Paris and Zurich to join Hong Kong at the top spot was spurred on by the rise of the Euro and Swiss Franc against the US dollar, as well as the comparative decline in the cost of living in the two Asian cities that previously sat at the top of the table.
In addition to currency fluctuations, supply chain problems, government actions, fall in incomes and changes in lifestyle are also reasons behind the shift in global prices. With the majority of the global population still working remotely, stay-at-home shoppers now have new views on the goods and services they see as essential.
Upasana Dutt, Head of Worldwide Cost of Living at The Economist Intelligence Unit, said, “The COVID-19 pandemic has caused the weakening of the US dollar while western European and north Asian currencies have strengthened against it, which in turn has shifted prices for goods and services. The pandemic has transformed consumer behaviour, 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.
"Asian cities have traditionally dominated the rankings in the past years but the pandemic has reshuffled the rankings of this edition. Zurich and Paris are now tied at the top spot with Hong Kong. The pandemic has led to the reshaping of employee expenses. In terms of consumer goods, there has been a sharp increase in the prices of computers, while clothing prices have seen a decline.
Although much will depend on the course of the pandemic, we expect many of the above price trends to continue into 2021. With the global economy unlikely to return to pre-pandemic levels until 2022, spending will remain restricted and put prices under downward pressure. Many price-conscious consumers will prioritise spending on staples, home entertainment and faster internet access. Big-ticket items, as well as clothing and out-of-home recreation, will continue to struggle.”
Prices in Singapore fell as the pandemic led to an exodus of foreign workers. With the city state’s overall population contracting for the first time since 2003, demand has declined, and deflation has set in. Osaka has seen similar trends, with consumer prices stagnating and the Japanese government subsidising costs such as public transport.
New York, the city the index is benchmarked against, and Los Angeles both fell compared to their ranking in the last index. New York fell to joint seventh with Geneva, and Los Angeles fell to ninth, a spot it shared with Copenhagen.
The coronavirus pandemic has impacted spending habits all over the world, with the prices of essential goods proving more resilient than those deemed non-essential. However, this translates to prices for staples, such as coffee, cheese, rice and orange juice, remaining flat, rather than increasing.
Clothing was the only category to see an average fall in the index, despite a shift to online retailing, many consumers delayed wardrobe changes. On the other hand, consumer electronics (categorised within recreation) saw the largest rise, in line with the entire category. This particular rise can be attributed to production shortages and increased demand as people moved to working from home.
This year’s biggest mover was Tehran, which saw a move up the rankings of 27 places, as the country faces US sanctions and a consequential reduced supply of goods.
A free version of the report can be downloaded at www.eiu.com/wcol.