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ECA’s cost of living indices enable companies to easily
compare everyday living costs in the host location against
those in the home country.
The index can then be used in
salary calculations to ensure that the expatriate maintains
a similar spending power in the host country as he would
have enjoyed back home.
Companies can choose from three different types of index
to reflect different situations:
Standard home-based index
Assumes that
expatriates shop less cost-effectively abroad than at home
when purchasing goods of comparable quality to those
bought in the home country.
Cost-effective home-based index
Assumes that the
expatriate shops as cost-effectively in the host country
as at home, without any reduction in the quality of goods
selected.
Cost-effective international index
Gives
place-to-place comparisons based on an international
lifestyle, assuming cost-effective shopping.
Data is collected twice a year by expatriates, local
nationals and ECA staff, to ensure that accurate prices are
recorded. The basket of goods for which prices are collected
includes: food and meals out; drink and tobacco; household
goods and services; entertainment; stationery; clothing;
electrical goods; motoring.
For countries with high inflation,
indices are updated more frequently.
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