Tel Aviv has overtaken Paris and is now ranked as the world’s most expensive city to live in, the Economist Intelligence Unit found in a new study.
According to the data, soaring price increases are contributing to the fastest rise in the cost of living for city dwellers in five years. The EIU’s 2021 index, which tracks the cost of living across 173 cities across the world, reveals Tel Aviv is the world’s most expensive city, rising from fifth place in 2020 to overtake Paris, which previously occupied the top spot, JPOST (Jerusalem Post) reports.
On average, prices for the goods and services covered by index have risen by 3.5% in local-currency terms, compared with an increase of just 1.9% this time last year.
Transport costs rose most rapidly in this year’s survey, mainly because of rising oil prices driving a 21% increase in the price of unleaded petrol, but the recreation, tobacco and personal care categories also showed strong increases.
Tel Aviv’s rise mainly reflects the strength of the shekel against the US dollar and increases in grocery and transport prices. The city that saw the biggest jump was Tehran, which rose from the 79th to 29th place as international sanctions continue to cause shortages and price increases.
The Worldwide Cost of Living reports that rankings continue to be sensitive to shifts brought about by the COVID-19 pandemic. The survey data were collected between August 16 and September 12, 2021, when freight rates and commodity prices were on an increase across the world. Combined with fluctuating consumer demand and exchange-rate shifts, the resulting supply-chain problems have fueled price rises in the world’s major cities.
“Although most economies across the world are now recovering as COVID-19 vaccines are rolled out, many major cities are still seeing spikes in cases, leading to social restrictions. These have disrupted the supply of goods, leading to shortages and higher prices,” said Upasana Dutt, head of WCOL at EIU.
Dutt said that the cost of living was expected to further rise in the coming year and that central banks will raise interest rates to stem inflation. “So the price increases should start to moderate from this year’s level,” Dutt said.
The top of the list is dominated by European and developed Asian cities while the cheapest cities are mainly in the Middle East and Africa. Damascus retained its place as the cheapest city in the world to live in. It came at the bottom in seven of the 10 pricing categories, and close to the bottom in the remaining three.