New York was the world’s most expensive metropolis in 2022, sharing the unwelcome title with Singapore as soaring energy prices doubled the rate of inflation in the world’s major cities, according to the annual survey. ‘Economist Intelligence Unit.
Last year’s leader Tel Aviv fell to third place, while Sydney slipped into the Top 10 and Russia’s Moscow and St Petersberg climbed 88 places in the rankings, penalties and surging oil prices have propelled prices higher, according to the EIU’s Global Cost of Living report. .
Venezuela’s capital, Caracas, with its 132% price hike in 2022, was well below the 2019 hyperinflation rate of over 25,000%, but still too high to be included in the survey. Average inflation of 8.1% in local currency was still the highest in more than two decades of surveys, and up from 3.5% last year and 1.9% in 2020.
A stronger currency was also a factor that pushed cities up the rankings. Six of the eight strongest climbers (after the two Russian cities) were American cities, with Atlanta leading the way from 42nd to 46th place in the ranking of the 172 cities studied. The US currency strengthened strongly against almost all currencies as the US Federal Reserve raised interest rates and announced further hikes to come.
Cities in countries where their currencies have crashed were among those that dropped from the list of most expensive cities. Tokyo and Osaka in Japan were among the 10 biggest drops, finishing in 37th and 43rd place respectively, compared to 13th and 10th in 2021.
Stockholm and Luxembourg fell the most, both falling 38 places to 99th and 104th. Damascus in Syria and Tripoli in Libya retained their places as the least expensive cities surveyed.
Singapore’s place at the top of the index comes as no surprise. The city-state was the second most expensive city in 2021 and has been No. 1 in eight of the past 10 years. This year was the first time the Big Apple was ranked No. 1.
The three UK cities surveyed have all fallen in the rankings, with London now down to 28th from 17th in 2021. Edinburgh came in 46th, down from 27th, while Manchester was 73rd most expensive from 41st last year.
Australian cities have generally moved up the rankings, with the port city rising from 14th place last year to 10th place in 2022. Melbourne moved from 16th to 15th last year, while Brisbane was 32nd from 36th . Perth bucked the trend, falling two places to 73rd.
The global inflation spike had accelerated before Russia’s invasion of Ukraine in February caused disruptions in the supply of essential commodities, especially foodstuffs. Subsequent sanctions against Russia caused further spikes in oil, gas and other energy prices.
Rising gasoline prices have produced the single greatest propellant to higher inflation. On average, a liter of fuel was 22% more expensive in local currency than a year earlier.
Gas and electricity prices were 29% higher in Western European cities, nearly triple the average increase of 11% globally, as the region scrambled to find alternatives to Russian energy.
Comfort for some of these increases came from “moderate” increases in the price of recreational goods and services. “[T]this may reflect weaker demand as consumers focus spending on essentials,” the EIU said.
Barring an unforeseen calamity, the EIU expects cost increases to subside in 2023 as higher interest rates remove some of the demand pressure and supply chain lockdowns. supply will begin to slacken. China could remain a wild card as its zero Covid policy begins to unravel.
The good news is that prices may start to fall in some countries as interest rates rise.
“Unless the war in Ukraine escalates, we expect commodity prices for energy, food and supplies such as metals to fall sharply in 2023 from 2022 levels, although they are likely to remain higher than previous levels,” the report said. . Global commodity prices are expected to rise another 6.5% in 2023, but down from the 9.4% recorded in 2022.
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