How has Covid-19 impacted the world’s most expensive cities?
The Economist Intelligence Unit’s (EIU) Worldwide Cost of Living survey, compiled in September 2020, discovers how the pandemic has changed the cost of living in 133 cities since the start of the year.
The survey reveals that Zurich and Paris have overtaken Singapore and Osaka as the most expensive cities in the world, ranking joint first with Hong Kong.
Singapore and Osaka occupied the top place last year (joint with Hong Kong) but have dropped to fourth and fifth places respectively since the onset of the pandemic.
The survey attributes Singapore’s fall in rankings to an exodus of foreign workers during the pandemic, which led to a reduction of the overall population for the first time since 2003, and a period of deflation. Osaka experienced similar trends, with consumer prices stagnating while the Japanese government subsidised costs including public transport.
The remaining locations to rank in the ten most expensive cities in the world included Tel Aviv in fifth place (joint with Osaka), Geneva and New York in seventh, and Copenhagen and Los Angeles placing joint ninth. This means that four European cities now rank amongst the top ten most expensive in the world.
Meanwhile, cities in the Americas, Africa and Eastern Europe have fallen in the rankings since last year, while Western European cities have become more expensive due to the rise in European currencies against the US dollar. This contrasts with last year’s survey, which saw US cities experience higher living costs due to the strength of the dollar.
European cities such as Belgrade have moved up the ranks by 12 spots, while Rome, Dusseldorf, Brussels and Amsterdam have risen by 11 places.
Reykjavik saw the steepest decline in the last 12 months, falling from 29th to 56th position, while Brazil’s cities of Rio de Janeiro and Sao Paolo followed closely behind due to weak currencies and rising poverty levels. They both dropped by 23 places to 119th position.
In explaining the results, the survey notes the impact of supply chain problems on pricing trends, with shortages of goods including toilet roll and pasta fuelling prices in some categories. Tehran, for instance, was the largest climber in the rankings, rising by 30 spots to 79th place, with the increase ‘directly linked to US sanctions, which have stopped imports in several categories’.
The survey also reveals that changes in lifestyle caused by the pandemic have had an impact on the cost of living around the world, as people have modified their views on the goods and services that they deem essential.
In terms of what to expect for 2021, the survey predicts that trends including restricted spending and prioritising essentials will continue into next year.
Upasana Dutt, Head of Worldwide Cost of Living at The Economist Intelligence Unit, commented on the results:
“The Covid-19 pandemic has caused the US dollar to weaken 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. Although much will depend on the course of the pandemic, we expect many of the above price trends to continue into 2021.”