This may seem surprising, but it is a first for the great American metropolis of eight million inhabitants – 20 million if you count the entire metropolitan area. New York had never come out on top. To be precise, the city on the east coast of the United States shares this place with Singapore, in Asia. But Singapore is a habit. For several years, life has been extremely expensive in this city-state of 6 million inhabitants.
The report of The Economist above all confirms statistically what everyone experiences on a daily basis while shopping: the cost of living has increased all over the world. An increase of 8% on average in the 172 cities studied. This is the strongest increase for 20 years. Unsurprisingly, the highest increases concern gasoline (+22%), electricity and gas prices (+11%) and finally food. The explanations, we know them well: the aftermath of the Covid-19 pandemic and the war in Ukraine, with in both cases a major impact on world trade and therefore supply chains.
The impact of the strong dollar
If New York is in the lead, it is because of the level of the dollar in recent months. The US currency remains a safe haven in times of international crisis like today. Consequence: in absolute value, the cost of living increases even more in all major American cities. This is not only true for New York, Los Angeles finds itself fourth in this ranking, San Francisco eighth. Other cities like Atlanta or Boston are also progressing strongly in this ranking.
The other country where the cost of living is exploding, and for completely different reasons, is Russia. Moscow and Saint Petersburg remain cheaper in absolute terms, ranked 37th and 73rd respectively. But these are the two cities where the situation has deteriorated the most, with an average price increase of between 17 and 20%. No need to explain why.
Conversely, several major Asian and European cities are falling in this ranking. This is the case of Tokyo and Osaka, in Japan: the level of the ye, the Japanese currency, is quite low. Major European cities are also declining, for example Paris, now the ninth most expensive city in the world (the French capital was fourth in 2021). It may come as a surprise, but here too it is the effect of exchange rates: the euro is low, so in absolute value, the cost of living decreases. Simply it does not change anything for the inhabitants; it’s just cheaper when you come from elsewhere. A precision, kyiv in Ukraine has not been evaluated : too complicated.
The hope of lower inflation in 2023
Another surprise, the report is relatively optimistic for the coming year; he is even quite categorical: “There is good news ahead of us.” This is the formula used. So be careful, precise The Economist, inflation will continue, but it will slow down. Both for food and energy. Prices are expected to stabilize further, partly due to rising interest rates. Except, the report says, except if the war in Ukraine escalates.
