Tel Aviv has been named as the most expensive city in the world to live in, as soaring inflation and supply-chain problems push up prices globally.

The Israeli city came top for the first time in a survey by the Economist Intelligence Unit (EIU), climbing from fifth place last year and pushing Paris down to joint second with Singapore.

Damascus, in war-torn Syria, retained its place as the cheapest in the world.

The survey compares costs in US dollars for goods and services in 173 cities.

The EIU said the data it collected in August and September showed that on average prices rose 3.5% in local currency terms – the fastest inflation rate recorded over the past five years.

Transport has seen the biggest price increases, with the cost of a litre of petrol up by 21% on average in the cities studied.

Tel Aviv’s climb to the top of the EIU’s World Cost of Living rankings mainly reflected the soaring value of Israel’s currency, the shekel, against the dollar. The local prices of around 10% of goods also increased significantly, especially for groceries.

The survey found Tel Aviv was the second most expensive city for alcohol and transport, fifth for personal care items, and sixth for recreation.

Last year, Paris, Zurich and Hong Kong shared joint first place. Zurich and Hong Kong were fourth and fifth this year, followed by New York, Geneva, Copenhagen, Los Angeles and Osaka.

The cheapest cities are mainly in the Middle East and Africa. But Tehran climbed the most in the rankings, jumping from 79th to 29th, as US economic sanctions reinstated three years ago continued to cause shortages of goods and rising import prices in Iran.

Rome saw the biggest drop in the rankings, falling from 32nd to 48th place, after sharp falls in local grocery and clothing prices.

The EIU said the rankings continued to be sensitive to shifts brought about by the coronavirus pandemic.

“Although most economies are now recovering as Covid-19 vaccines are rolled out, the world’s major cities still experience frequent surges in cases, prompting renewed social restrictions. In many cities this has disrupted the supply of goods, leading to shortages and higher prices.”

It added: “Fluctuating consumer demand has also influenced purchasing habits, while investor confidence has affected currencies, further fuelling price rises.”

The EIU said it expected price rises to moderate over the coming year as central banks cautiously increased interest rates to stem inflation.

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Source: GhArticles.com