Covid shaking up expat living costs

Paris and Zurich have joined Hong Kong as being ranked as the world's most expensive cities for expats after a year when the coronavirus has shaken the annual ratings compiled by the Economist Intelligence Unit (EIU).

David Sapsted

19 November 2020

The Worldwide Cost of Living Index - a survey of the prices of 138 goods and services across 130 countries - showed that the French capital and Zurich had ousted Singapore and Osaka from the top spots this year, while Hong Kong retained its joint first place from last year.But the biggest climber this year in an index designed to inform companies deploying staff abroad, was Tehran, which rose 27 places in the rankings, mainly because US sanctions had seen the price of many goods soar.In much of the rest of the world, though, it was the pandemic that prompted a major shift in costs of many goods and services, with the surge in remote working resulting in changing consumer consumption and prompting an unprecedented rise in demand for laptops and other home office technology.Upasana Dutt, head of the Worldwide Cost of Living Index at the EIU, said, "Asian cities have traditionally dominated the rankings in the past years but the pandemic has reshuffled the rankings of this edition."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."In terms of consumer goods, there has been a sharp increase in the prices of computers, while clothing prices have seen a decline."The Covid-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."Singapore, now in fourth place, saw prices fall because of an exodus of foreign workers, the report said.“With the city state’s overall population contracting for the first time since 2003, demand has declined and deflation has set in. Osaka has seen similar trends, with consumer prices stagnating and the Japanese government subsidising costs such as public transport,” according to the report.Most Chinese cities have risen up the rankings largely due to the US-China trade war, which has tested the resilience of supply chains and raised consumer prices. Cities in the Americas, Africa and Eastern Europe have become less expensive since last year, while Western European cities have become costlier.Meanwhile, the cheapest - and, perhaps. one of the least desirable - city for expats was adjudged to be Damascus, where prices were just less than Tashkent, Lusaka, Caracas and Almaty in Kazakhstan.But the report added that the biggest price drops had taken place in Brazil's Rio de Janeiro and São Paolo, reflecting weak currencies and rising poverty levels.Looking to the future, the report said: "Although much will depend on the course of the pandemic, we expect many of the price trends to continue into 2021. With the global economy unlikely to return to pre-pandemic levels until 2022, spending will remain restricted and prices under downward pressure."Many price-conscious consumers will prioritise 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."Above all, pricing and sales strategies will be driven by lockdown rules. Where only essential retail is permitted, competitive one-stop-shopping destinations, including online marketplaces (such as Tmall, Shopee and Amazon) and real-world superstores (such as Walmart, Costco and Carrefour), will do well."Until recently, online retail has favoured international brands, but this advantage is now being eroded. Direct-to-customer channels will give companies better control over pricing and inventory."Ten most expensive cities according to EIU:1=Paris
Zurich
Hong Kong
4.Singapore
5=Tel Aviv
Osaka
7=Geneva
New York
9=Copenhagen
Los Angeles