For the first time Venezuela’s capital city has become the most expensive place in the world for expatriates. This is among the findings of the latest Cost of Living survey by ECA International, the world's leading provider of knowledge, information and technology for the management and assignment of employees around the world.
The ongoing rampant inflation and severe shortages of exported goods being experienced in Caracas has led to its rise up from last year’s 7th position to top the ranking – despite large falls in the value of the bolivar. It is now more expensive for international assignees than Tokyo, Luanda and Oslo – cities that are regularly found in that top spot.
However, Caracas’ position at the top of the list may be short-lived, as building pressure on the currency could lead to a devaluation in the near future.
“Prices for items in ECA's shopping basket in Venezuela have gone up by over 60% on average since last year, and despite the government’s many attempts to manage the currency differently its peg to the USD means it remains considerably overvalued,” said Steven Kilfedder, Manager, Cost of Living and Remuneration Services at ECA International. “Although a devaluation would push inflation up even higher, at least at first, the shortages of dollars and goods on shop shelves will worsen if no devaluation takes place. Companies with expatriate staff in the country will need to continue to monitor the situation closely to ensure they are granting appropriate cost of living allowances.”
Caracas is followed by the Angolan capital, Luanda and the Norwegian city of Oslo.
To ensure that their employees' spending power is not compromised while on international assignment, multinational companies will often include a cost of living allowance in their pay package. Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages. To assist companies with their calculations ECA carries out two Cost of Living Surveys per year, comparing a basket of like-for-like consumer goods and services commonly purchased by assignees in 440 locations worldwide.
Americas – more regional highlights
Manhattan is the region's second most costly location, and is in 33rd position globally. The most expensive Canadian location is Vancouver which is in 5th position in the Americas and 53rd globally.
Within Latin America, Caracas is followed by Haiti (57th globally) and Buenos Aires (61st). Brazilian cities have fallen dramatically in the ranking, with Rio de Janeiro falling 66 places to 130th worldwide. The sharp depreciation in the Brazilian Real over the past 12 months has made Brazil considerably cheaper for many expatriates.
While Tokyo still tops the list of the most expensive locations in Asia for expatriates, globally it has fallen to 10th place on the back of a weaker Yen – a significant drop from last year, when it was the most expensive city in the world for expatriate staff. Companies that need to locate staff into Japan can now do so for considerably less than in recent years, despite the long period of deflation in the country being reversed earlier this year.
After Japan, some of the biggest falls in living costs in Asia have been seen in Indonesia – also partly as a result of a weaker currency. Jakarta has dropped 45 spots to 172nd place globally.
Beijing is now Asia’s second most expensive location after Tokyo. Globally, the Chinese capital is the 15th most expensive location for expatriates. Shanghai previously in 25th position is now in the 18th position in the global results. Hong Kong ranks 28th globally, while Singapore is in 30th position.
"It's important to remember that certain living costs, such as accommodation rental, utilities, car purchases and school fees are not included in our cost of living basket," continued Kilfedder. "Because these costs are usually addressed separately by an expatriate's employer, we collect this data separately. But if we were to include such costs, Hong Kong and Tokyo would be higher in the ranking, while Beijing would be significantly cheaper due to lower housing costs."
Sydney and Canberra, both in the top 20 most expensive locations in the world for expatriates a year ago, are now ranked 31st and 39th respectively. All locations in Australia have become cheaper due to the weakening of the Australian dollar against most major currencies.
Norway's capital Oslo remains Europe's most expensive city for expatriates and the third most costly in the world. With the exception of Moscow, the region's top ten is dominated by Western European cities in Switzerland, Scandinavia and Finland. The strengthening of the euro against the dollar over the 12 months between surveys has contributed to significant climbs up the ranking for Dutch and German locations. Turkish cities have seen some of the region's more significant falls, due largely to the depreciation of the Lira.
In the Middle East, the most expensive locations for expatriates continue to be the Israeli cities of Tel Aviv, ranked 24th globally, and Jerusalem (27th). They have both climbed even further up the ranking this year due to the strengthening of the Shekel against other major currencies. In the United Arab Emirates, the price of items in ECA's cost of living basket for expatriates has gone up significantly and both Dubai (171st globally) and Abu Dhabi (180th) have also risen in the ranking.
Angola's capital, Luanda, is Africa's most expensive city and the world's 2nd most expensive for expatriates. It is followed by Juba, Brazzaville and Libreville - all of which also feature in the global top 20. The cost of goods typically purchased by international assignees in these locations are likely to be high due to import and transportation costs. Maseru in Lesotho is the cheapest location not only in Africa but worldwide. The significant depreciation of the Rand has contributed to the lower positions of South African cities and locations in countries where the currency is tied to the Rand, including Lesotho.
Prices of some sample items from ECA International's basket of goods and services commonly purchased by expatriates, in US dollars
Rio de Janeiro
Notes to Editors
Figures used in this release were taken from ECA's Cost of Living Survey.
ECA's blog, MoneyMoves, provides updates and commentary on currency, inflation and expatriate cost of living. Follow the blog here: http://ecamoneymoves.com/
ECA’s other blog, wanderingmark, is written by its International Data Researchers who report back on places they visit to monitor and research cost of living: http://ecaintlblog.wordpress.com/
About ECA's Cost of Living Survey
ECA International's cost of living indices are calculated based on surveys carried out annually in March and September using a basket of day-to-day goods and services. The data used above refers to year-on-year movements between ECA's September 2012 and 2013 surveys.
The data is used by ECA clients to calculate cost of living allowances for assignees. The survey covers:
Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables
Basic: Drink and tobacco; miscellaneous goods; services
General: Clothing; electrical goods; motoring; meals out
Certain living costs such as accommodation rental, utilities charges (electricity, gas, water), car purchases and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.
This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons, and different levels of shopping efficiency.
Top 50 most expensive cities worldwide for international assignees
Papua New Guinea
United States of America
United States of America
United States of America
About ECA International (www.eca-international.com)
Recognised since 1971 as a world authority in its field, ECA is a leader in the provision of knowledge, information and technology to inform, guide and support managers handling compensation and benefits for international workers moving around the world. ECA offers organisations of all sizes an unrivalled portfolio of data, calculation aids, salary management software, reports, guides, surveys and consultancy to help them structure and manage their international rewards programmes for long-term, short-term and permanent moves.