JEDDAH: Saudi Arabia's old capital has been ranked one of the world's ten least expensive cities in the latest survey of the Economist Intelligence Unit’s (EIU).
Jeddah, also known as the Bride of the Red Sea, ranked No. 123 out of 131 cities in 93 countries that were covered in the EIU Worldwide Cost of Living Index for 2013.
Along with Jeddah in the bottom 10 were Pakistan's Karachi city (131), the Indian cities of Mumbai (130) and New Delhi (129), Nepal's capital Katmandu (128),
Algeria's capital Algiers (127), Bucharest in Romania (126), Sri Lankan capital Colombo (125), Panama City of Panama (124), and Iran's capital Tehran (122).
In contrast, Tokyo in Japan led the 10 most expensive cities, reclaiming the title after Zurich of Switzerland, last year's No. 1, was pushed down to No. 7 in the list by government exchange rate controls, said the survey.
Osaka in Japan was ranked the 2nd most expensive in the 2013 survey.
Jon Copestake, editor of the EIU Worldwide Cost of Living Index, said one of the most notable changes was the rising costs in Australia, with Sydney 3rd in the list and Melbourne 5th. Sandwiched between them was Oslo in Norway.
Asia and Australasia account for 11 of the world’s top 20 most expensive cities, with eight from Europe and one from South America. No North American cities featured in the top 20.
This compared to a decade ago when there were six Asian cities, 10 European cities and four US cities in the top 20 of the list that calculates living costs in 131 cities in 93 countries and is used by companies for costings when relocating staff.
“Ten years ago there were no Australian cities in the top 50 most expensive cities and I have not seen this sort of climb with any other cities,” Copestake told Reuters.
“But economic growth has supported inflation and the strength of the Australian dollar against other currencies besides the US dollar has driven up costs. Visitors will certainly feel the difference and people living there will have noticed prices have crept up.”
Rising costs in Asia
The twice-a-year survey is based on costs of over 160 products and services ranging from food and clothing, to domestic help, transport and utilities.
EIU said more than 50,000 individual prices are collected in each survey, conducted each March and September and published in June and December.
"EIU researchers survey a range of stores: supermarkets, mid-priced stores and higher-priced speciality outlets. Prices reflect costs for more than 160 items in each city. These are not recommended retail prices or manufacturers’ costs; they are what the paying customer is charged," said the survey report.
Copestake said the return of Tokyo to top of the list came as no great surprise as the Japanese capital had steep real estate costs and rents, as well as high wages fueling prices.
Since 1992 Tokyo has been the top-ranking city in every year bar six when Zurich, Paris and Oslo claimed the No.1 spot.
Copestake said fears over economic austerity and the stability of the euro had pushed the index of euro zone cities down in the past year while the inclusion of Caracas was due to artificially high exchange rate controls.
Although no North American cities feature in the top 20, the EIU said the cost of living in New York had risen relative to other places in the United States. It shares 27th position as the most expensive US city with Los Angeles.
The Canadian city of Vancouver remains the most expensive location in North America, ranked 21st in the index.
Price comparison
Sample prices cited in the survey showed that in the ten most expensive cities, a kilogram loaf of bread currently costs between US$3.25 (Singapore) to US$9.06 in Tokyo.
In contrast, the cost was between US$0.86 (Mumbai) and US$3.34 (Panama) in the ten cheapest cities. In Jeddah, a 1kg loaf of bread currently costs an average of US$1.33.
Said the survey, "the cheapest cities in the ranking have a familiar feel to them, both in terms of geography and consistency. While Asia is home to over half of the world’s 20 most expensive cities, the region is also home to six of the ten cheapest cities.
"Within Asia it is also possible to drill down to the geographic area offering the lowest prices. Five of the bottom ten (and six of the bottom eleven) cities hail from the Indian subcontinent (defined as India, Pakistan, Bangladesh, Nepal and Sri Lanka). Mumbai and Karachi are the joint cheapest locations in the survey, with indices of just 44 when compared with New York.
"Although India is something of a tiger economy tipped for future growth, much of this is driven by its large population and the untapped potential within the economy. Income inequality means that household spending levels are low on a per capita basis, which has kept prices down, especially by Western standards. Outside India bargain hunters may be put off by the security risk in many of the countries in which the world’s cheapest cities are found. Bangladesh, Pakistan, Nepal, Sri Lanka, Algeria and Iran all feature in the bottom ten, but have had well documented security issues or domestic unrest."
The survey, however, made exception to Jeddah, Bucharest, Panama City, saying these cities "could offer a cheap cost of living in a more stable environment."
• With a report from Reuters
