Caracas in Venezuela is the world’s most expensive location for expatriates according to 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.
Caracas, which ranked 32nd in the global standings 12 months ago, has overtaken last year’s No. 1, the Norwegian capital, Oslo. Luanda which occupied second place last year, dropped to third ahead of a raft of European cities, including Zurich, Geneva, Stavanger, Bern and Basel and Copenhagen. The only other non-European location in the top 10 list was the African city of Juba, which sits in 9th place, down from 4th in the previous ranking.
ECA carries out two main Cost of Living Surveys per year to help companies calculate cost of living allowances so that their employees' spending power is not compromised while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 440 locations worldwide.
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. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.
Caracas, Venezuela, overtook Oslo in Norway six months ago to become the most expensive place in the world for expatriates. At that time it was widely anticipated that a devaluation of the bolivar would take place and that cost of living in Caracas would subsequently fall. This has not yet happened and, while a parallel exchange rate exists, it does not seem to be widely available. Annual inflation in Venezuela is now over 80% and the cost of living in Caracas is currently 40% higher than second-placed Oslo.
Manhattan is the region's second most costly location, and in 39th position globally – up three places on last year. Although Vancouver is in 6th position in the Americas, it has fallen significantly in the global ranking from 50th to 88th. This is due largely to the weakening of the Canadian dollar against major currencies over the past 12 months.
Within Latin America, Caracas is followed by Haiti’s Port au Prince (77th globally). Brazilian cities have fallen dramatically in the ranking. Rio de Janeiro has dropped 72 places over the year to 123rd worldwide while Sao Paulo has fallen from 64th to 130th in the global ranking. The sharp depreciation in the Brazilian real over the past 12 months has made Brazil considerably cheaper for many expatriates.
Oslo, 2nd globally, remains Europe's most expensive city for expatriates. The region's top ten is dominated by cities in Switzerland, Scandinavia and Finland. Moscow has fallen from 3rd to 10th in the region and globally is down to 22nd position from last year’s 5th place. The rouble fell sharply against the US dollar and other currencies over the year.
In the UK, a reversal in the recent trend of cities falling in the rankings has been seen. A stronger pound has pushed up costs for many expatriates there and central London jumped 40 spots to 46th position in the global ranking – the highest position it has held since 2008. A stronger euro has also seen Eurozone locations climb the ranking.
Tokyo (11th globally) maintains its position as the most expensive Asian location for expatriates but after losing the world top spot a year ago it has now also dropped out of the global top ten for the first time in at least a decade. Economic policy and fiscal changes, such as the increase in sales tax from 5-8 percent, have led to a significant increase in prices in Japanese cities. However, the yen’s continued depreciation against major currencies over the year has caused these locations to fall in the rankings.
Chinese cities have surged up the list in recent years. Just five years ago Shanghai and Beijing were barely in the top 50 now they rank 18th and 20th respectively. Prices have risen over the past 12 months in contrast to last year when prices of items in ECA’s shopping basket for Chinese locations increased little or even fell. In terms of currency, while the renminbi has fallen over the year against the euro and sterling it has strengthened against the US dollar.
Sydney has been overtaken by Auckland in the global ranking. The New Zealand city has risen 8 places over the year to take 36th position while Sydney fell from last year's 17th place to 38th. The weakening of the Australian dollar against major currencies is the main factor behind all the Australian cities surveyed falling in the global ranking again this year.
The strengthening of the shekel against major currencies over the past twelve months has contributed to both Tel Aviv and Jerusalem being in the global top 30: they rank 21st and 25th respectively and remain the most expensive locations in the Middle East for expatriates.
Both Dubai (165th globally) and Abu Dhabi (177th) have risen again in the ranking this year. Prices of items in ECA’s basket of goods for the United Arab Emirates overall have increased at almost three times the rate they did a year ago.
Within Africa, Luanda is followed by Juba (9th), Brazzaville (12th) and Libreville (14th). The high costs involved in importing and transporting international goods into these countries contributes to making them expensive for expatriates. Maseru, Lesotho, is the cheapest location in Africa and in the ranking. Locations in Ghana, Namibia and South Africa have continued to fall in the global ranking of most expensive locations. Their weak currencies continue to make them cheaper locations for many employees being relocated there.
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 March 2013 and 2014 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
Democratic Republic of the Congo
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.