Restrictions due to the COVID-19 pandemic “have disrupted the supply of goods, leading to shortages and higher prices,” said Upasana Dutt, the head of worldwide cost of living at The EIU.
“We can clearly see the impact in this year’s index, with the rise in petrol prices particularly stark,” she said, while central banks are expected to raise interest rates cautiously, reducing inflation.
The average inflation figure does not include four cities with exceptionally high rates: Caracas, Damascus, Buenos Aires and Tehran. The Iranian capital rose from 79th to 29th place in the ranking as US sanctions have pushed up prices and caused shortages.
Tel Aviv cost of living
High cost of living has been a persistent issue in Tel Aviv.
In 2011, a “tent revolution” saw young Israelis furious at sharp rises in rents erect shelters on the upmarket Rothschild Boulevard in the heart of the city. A decade later, the tents are gone but the soaring prices have remained.
“The protest had a temporary effect,” said Asher Blass, former chief economist at the Bank of Israel. Tel Aviv’s ranking this year is primarily due to the strong local currency, he said.
Last month, the shekel reached a 25-year high against the dollar. As the cost of housing and other basics like groceries has increased, wage growth has been uneven.
“A lot more needs to be done in opening up competition for goods like agricultural produce” to bring down prices, Blass said.
Top 10 world’s most expensive cities to live in 2021
1. Tel Aviv
Tel Aviv topped the list partly due to the strength of Israeli shekel against the US dollar [File: Corinna Kern/Reuters]
2. Paris (tie)
Paris took second place after topping the list last year [File: Philippe Lopez/AFP]
2. Singapore (tie)
Singapore’s cost of living tied with Paris in second place, according to the Economist [File: Suhaimi Abdullah/NurPhoto via Getty Images]
Switzerland is considering tighter restrictions to contain the rising number of new COVID-19 cases and the emergence of the Omicron variant of COVID-19 [File: Christian Ender/Getty Images]
5. Hong Kong
Hong Kong fell to fifth place on the list as prices of clothing and personal care dipped, according to the Economist [File: Peter PARKS/AFP]
6. New York City
New York City is often used as the benchmark for the cost of living index [File: Dominik Bindl/Getty Images]
Geneva is the second Swiss city after Zurich to rank in the top 10 [File: Fabrice Coffrini/AFP]
Residential and commercial buildings stand on the city skyline seen from the Vor Frue Kirch church tower in Copenhagen [File: Freya Ingrid Morales/Bloomberg via Getty Images]
9. Los Angeles
Los Angeles was the second US city on the list [File:Jerritt Clark/GC Images]
Japan, Osaka City, Umeda District skyline [File: Prisma by Dukas/Universal Images Group via Getty Images]