Tel Aviv has been ranked the most expensive city in the world to live in thanks to rapidly rising inflation that has pushed up the cost of a range of goods and services around the world in the wake of the coronavirus pandemic.
The Israeli city has climbed five places in the past 12 months to wrest the unwanted title from the joint winners of Paris, Hong Kong and Zurich last year, according to the authoritative ranking system compiled by the Economist Intelligence Unit (EIU).
The French capital was second with Singapore, while Zurich and Hong Kong made up the rest of the top five. New York was sixth, Geneva seventh and Copenhagen, Los Angeles and Osaka completed the Top 10.
London moved up three places to 17 in the annual ranking, with Sydney one to 14 and Melbourne two to 16.
Tel Aviv’s boom was in part due to the strength of the national currency, the shekel, against the dollar, as well as rising prices for transportation and groceries.
It was ranked the second most expensive city for alcohol and transportation, and fifth for personal care and sixth for recreation. It ranked in the top third of EIU’s top 10 spending categories, with an index score up 5 points from a year ago.
The dislocation of the global economy as it recovers from the stop-start impact of lockdowns imposed by the pandemic this year has played a big role in shaking up the rankings.
Energy and food prices have skyrocketed in some countries due to trade restrictions, labor shortages and persistent supply chain bottlenecks. The average cost of a liter of unleaded gasoline has climbed 21%, according to the survey.
Data on 50,000 goods and services in 173 cities were collected in August and September as freight and commodity prices increased. On average, prices rose 3.5% in local currency – the fastest rate of inflation recorded in the past five years. The survey includes rental costs, but does not take real estate prices into account.
Upasana Dutt, Head of Global Cost of Living at EIU, said: “We can clearly see the impact on the index this year, with the rise in oil prices particularly strong,” adding that if central banks should increase interest rates cautiously, reduce inflation.
Forty new cities have been added to the ranking this year. The Scottish capital, Edinburgh, was the new highest entry on the charts, ranking 27th, tied with high cost-of-living cities like Auckland and Minneapolis. Two other new cities – Stuttgart and San Diego – also entered the Top 50.
Rome saw the biggest drop as it fell from 16 places to 48, with a particularly sharp drop in the cost of groceries and clothing. Bangkok and Lima were the second largest in the standings, with significant drops in all categories.
Tehran was the biggest climber after jumping 50 places to 29th thanks to lingering supply-side constraints, commodity shortages and rising import prices following the reimposition of US sanctions.
The average inflation figure does not include four cities with unusually high rates: Caracas, Damascus, Buenos Aires and Tehran.
Damascus has been ranked as the cheapest city in the world to live, followed by Tripoli in Libya and Tashkent, the capital of Uzbekistan.