Tel Aviv is now the world’s most expensive city

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Johnny Wood, Writer, Formative Content

• Soaring inflation has destabilized the cost of living in many countries.
• An annual cost of living survey found prices increased 3.5% in 2021 on average.
• Prices of goods and services in Tel Aviv are higher than in any other global city.
• War-torn Damascus in Syria retains its status as the world’s cheapest city to live in.

Tel Aviv has been awarded a title few urban centres would welcome after topping the global rankings for the city with the world’s highest cost of living.

The Israeli city displaced last year’s joint ‘winners’ Paris, Hong Kong and Zurich at the top of the Economist Intelligence Unit’s Worldwide Cost of Living 2021 index, which reflects a 12-month period that has been characterized by disruption.

Inflation in Tel Aviv has soared as the pandemic, supply chain challenges and exchange rate shifts have pushed up prices. This mirrors a global increase in inflationary pressure that has caused the index to record its highest increase for five years, averaging 3.5% year-on-year compared to just 1.9% in 2020.

As a result, this year there has been something of a shake-up. Israel’s buoyant currency, coupled with increased costs for transport and groceries, saw Tel Aviv jump five places from last year, ahead of Paris and Singapore as the second-most costly cities to live in.

Zurich moved down to fourth place and Hong Kong to fifth, from joint-first with Paris last year.

The top 10 most expensive city list is completed by New York in sixth, followed by Geneva, Copenhagen, Los Angeles and Osaka.

At the other end of the scale, the cheapest cities to live in are mainly in the Middle East and Africa or poorer parts of Asia.

A decade of conflict in Syria has depressed the country’s currency, the Syrian pound, leaving the capital city Damascus retaining last place in the index as the world’s cheapest to live in. Damascus ranked lowest in seven of the 10 pricing categories and among the lowest in the remaining three. Tripoli in Libya and Tashkent in Uzbekistan complete the index’s bottom three places.

Newcomers, climbers and fallers

Iran’s capital Tehran made the largest leap of the 173 cities surveyed, rising 50 places from 79th to 29th as US sanctions led to rising import prices and supply shortages – it was also the biggest climber last year. Other notable climbers include Reykjavik in Iceland, which jumped 21 places to 35th in this year’s ranking as items like transport and alcohol increased in price.

What’s the World Economic Forum doing about the future of cities?

Cities represent humanity’s greatest achievements – and greatest challenges. From inequality to air pollution, poorly designed cities are feeling the strain as 68% of humanity is predicted to live in urban areas by 2050.

The World Economic Forum supports a number of projects designed to make cities cleaner, greener and more inclusive.

These include hosting the Global Future Council on Cities and Urbanization, which gathers bright ideas from around the world to inspire city leaders, and running the Future of Urban Development and Services initiative. The latter focuses on how themes such as the circular economy and the Fourth Industrial Revolution can be harnessed to create better cities. To shed light on the housing crisis, the Forum has produced the report Making Affordable Housing a Reality in Cities.

Going in the opposite direction, grocery and clothing price drops in Rome saw it move from 32nd to 48th on the index, the biggest downward movement.

This year saw 40 newcomers to the index, including seven US cities and 11 in China. Edinburgh in Scotland was the highest-ranked new entry as the 27th most expensive city.

The survey, which has been conducted for more than 30 years, compares local prices of more than 200 goods and services in each city with New York prices, with researchers collecting data each March and September. More than 50,000 individual prices are collected every six months.

Prices are expected to increase further in the coming year in many cities. However, if the rate of price inflation falls and lockdowns and supply chain disruptions decrease, there could be cause for optimism towards the end of 2022, the report notes.