Paris is a lovely, beautiful city, but if you intend on staying there for any length of time, you might want to carry a bit of extra crash.
According to The Economist Intelligence Unit’s 2020 WorldWide Cost of Living survey, Hong Kong, Paris and Zurich are the world’s most expensive cities.
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 EIU report said.
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.
Zurich is no surprise, as Switzerland was already very expensive. Many locals are forced to cross the border to do their essential shopping.
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, the EIU report said.
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.
“The Coivd-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,” said Upasana Dutt, Head of Worldwide Cost of Living at EIU.
“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, Dutt said.
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, he added.
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, the EIU report said.
Osaka has seen similar trends, with consumer prices stagnating and the Japanese government subsidising costs such as public transport.
“Although much will depend on the course of the pandemic, we expect many of the above price trends to continue into 2021,” Dutt said.
“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 prioritize 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.”
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 (categorized 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.
Also, 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.
Sources: The Economist Intelligence Unit