Usual suspects New York and Singapore share the top spot, a position driven by high incomes and a strong US dollar. Tel Aviv, which topped the list last year, dropped to third, followed by Los Angeles and Hong Kong in fourth.
The 2022 edition compares the cost of living in 172 cities and analyzes the prices of more than 200 goods and services, including rent, utility bills, housewares and groceries. The research documented an 8.1 percent rise in global inflation over the past year: the highest increase since EIU began tracking nearly two decades ago.
5 issues behind the global cost of living crisis
Economists have partially attributed the global cost of living crisis to the war in Ukraine, along with China’s ongoing Covid-19 restrictions, other effects of the pandemic, supply chain issues, climate change and the growing impact of inflation itself .
Upasana Dutt, who led the cost of living this and last year, said the war in Ukraine is one of the two most important factors alongside the pandemic.
“What we’re noticing is a drag in the supply chain and that’s only happened because of the war,” she said. “Of course, if there hadn’t been a war, this kind of turmoil wouldn’t have been seen. It would be much more limited.”
As pandemic restrictions eased, a rising demand for goods met with continued supply chain blockages, Dutt said, leading to high levels of inflation. Western sanctions imposed on Russia “exacerbated the impact on the supply of goods everywhere”.
The report documents this impact in other European cities, where efforts to reduce reliance on Russian energy led to a 29 percent rise in gas and electricity prices in some regions, compared to an 11 percent global average.
According to the EIU, global utility bills have increased by an average of 11 percent and car prices in local currency have increased by an average of 9.5 percent. The strongest price increase noted in the report is for a liter of oil, which has risen by an average of 22 percent.
The European cities Luxembourg, Stockholm, Brussels, Lyon, France; and Manchester, England; made up five of the 10 cities that fell the most in the ranking this year – a result of economies weakened by the energy crisis.
In the United States, 22 cities have risen in the ranking after rapid price increases. Cities like Atlanta, Charlotte, Indianapolis, San Diego and Boston all saw major increases in the cost of living – among the top 10 largest global increases.
While Istanbul, Buenos Aires and Tehran have experienced high inflation rates, the highest recorded inflation was in Caracas, Venezuela, where the cost of living rose 132 percent over the past year.
The report expects some relief in 2023, if commodity prices “fall sharply”, as long as the war in Ukraine does not escalate.