Singapore has retained its unenviable ranking as the worldâ€™s most expensive city for the third straight year, with Hong Kong and Seoul also joining the top 10 list. But while residents of the powerhouse Southeast Asian economy are likely not exactly celebrating their status, at least those residing Down Under can still see the joy in lifeâ€™s lot while they drop down the rankings.
In its latest worldwide cost of living survey, the Economist Intelligence Unit (EIU) ranked Singapore top, Switzerland second and Hong Kong third, the latter rising seven places in its biannual survey of more than 130 cities in nearly 90 countries. The South Korean capital gained one spot to ninth, with its cost of living â€œnow on a par with that of Copenhagen and Los Angeles,â€ while the Australian cities of Sydney and Melbourne dropped to 20th and 21st, respectively largely due to the falling Aussie dollar.
Singapore remains â€œconsistently expensiveâ€ in a range of categories, particularly for buying and running a car due to its complex Certificate of Entitlement system, with transport costs 2.7 times higher than the base city of New York. Alongside Seoul, the city-state is also â€œa very expensive city in which to buy clothes and pay for utility costs,â€ the EIU said.
Buying a bottle of table beverage costs an average of $22.39 in Singapore and $25.43 in Seoul compared to just $8.06 in Geneva, while a liter of unleaded petrol costs $1.76 in Hong Kong compared to just $0.63 in New York. However, Seoul is a relative smokerâ€™s paradise with an average cost of $3.71 for 20 branded cigarettes compared to $14.30 in London, the survey found.
Nevertheless, buying a 1 kilogram loaf of bread is considerably cheaper in Singapore at $3.40 compared to a whopping $12.44 in Seoul, with Singapore offering the same value as New York for general basic groceries.
Stagnant inflation and a weak yen helped push Tokyo down to 11th and Osaka into 14th place, continuing a recent slide despite the two Japanese cities having traditionally been the worldâ€™s two most expensive cities over the past 20 years.
The good news for global travelers and expatriate workers has been a steady slowing of inflation across many cities on the back of falling commodity prices, particularly oil, and bearish sentiment in China, Latin America and Europe that has weighed on demand-side inflation, compounded by rising retail competition from cheaper online suppliers.
Most cities have become â€œrelatively cheaperâ€ over the past year, with the average cost of living for all cities surveyed dropping to 71.5 per cent of New York prices compared to 79.7 per cent in the previous annual survey and 87.8 per cent five years earlier.
Overall, Asian cities â€œtend to form the priciest locations for general grocery shopping,â€ with Seoul the most expensive for everyday foods, but European cities â€œtend to be the priciest in the recreation and entertainment categories,â€ the EIU said.
At the bottom of the list was the Venezuelan capital of Caracas, which if black market rates applied rather than its official exchange rate would be almost 10 times cheaper than New York, thanks to plummeting oil prices. However, cities in India and Pakistan also ranked among the cheapest 10 in the world, with Bangalore ranked 132nd, Mumbai 131st, Chennai 127th and New Delhi 126th, while Karachi placed 127th.
Looking ahead, the British forecaster said falling oil prices would put further downward pressure on emerging and oil producing countriesâ€™ currencies, leading to lower prices, while cheaper oil would free up discretionary income in major importers and potentially result in price rises in other categories. Weaker commodity prices would also act as deflators in some markets, it said.
Weaker exchange rates in countries such as Australia, Japan and New Zealand will further reduce prices for international travelers, while the US dollar continues its â€œfastest rise in 40 yearsâ€ on the back of the U.S. Federal Reserveâ€™s tighter monetary policy. Other factors affecting prices include geopolitical issues, such as a threatened British exit from the Eurozone, while conflict could drive localized inflation in some cities.
â€œWith emerging economies supplying much of the wage and demand growth, it seems likely that these locations, especially cities in China, will continue to become relatively more expensive. However, Chinese growth is slowing and measures have been taken to weaken its currency amid a stockmarket decline that could prompt a new wave of consumer caution. This could, in turn, drive down spending and undermine the wage and price inflation that has been taking place over the past decade,â€ the EIU said.
Aussies, Kiwis Happiest In Asia-Pacific
Yet amid a faltering global economy, geopolitical tensions and falling commodity prices, the peoples â€œDown Underâ€ have remained steadfast. According to the 2016 World Happiness Report, while European nations led by Denmark topped the global survey, New Zealand ranked eighth and Australia ninth, with Singapore Asiaâ€™s next highest at 22nd.
Thailand ranked 33rd, Taiwan 35th and Malaysia 47th, while Japan placed 53rd, South Korea 58th, Hong Kong 75th, Indonesia 79th, the Philippines 82nd and China 83rd. Among the 157 countries surveyed, Burundi came last but Myanmar ranked a lowly 119th, India 118th and Sri Lanka 117th, indicating that plenty of work lies ahead for Asiaâ€™s emerging economies.
The report said six key factors comprising gross domestic product per capita, social support, healthy life expectancy, freedom, generosity and absence of corruption accounted for three-quarters of the variation between the nations surveyed, with the first three categories the main contributors.
While India and Japan were among the 20 largest losers of happiness since the previous survey in 2005 to 2007, the report found that Japanâ€™s 2011 triple disaster actually led to increased happiness in the affected area.
â€œThere is now research showing that levels of trust and social capital in the Fukushima region of Japan were sufficient that the Great East Japan Earthquake of 2011 actually led to increased trust and happiness in the region.
â€œThe happiness effects of crisis response may also be mediated through generosity triggered by a large natural disaster, with the additional generosity adding to happiness,â€ the report said.
Despite political instability, Thailand ranked among the 20 largest gainers in happiness in the latest survey covering the period from 2013 to 2015, with China also showing a major improvement. In contrast, Greece fared the worst compared to the previous survey on the back of its economic crisis, followed by Egypt and Saudi Arabia.
For policymakers, the report argues that increasing the â€œequality of happinessâ€ is best achieved by broadening the focus from income and wealth to non-material factors, thereby also reducing stress on scarce material resources. While further research is required, it argues that â€œchanging the focus from income inequality to well-being inequality will speed the arrival of a time when the distribution of well-being can be improved, for the benefit of current and future generations in all countries.â€
The moral of the story might be that money does not equate to happiness â€“ but there is still plenty of joy in even some of Asiaâ€™s priciest cities.
Anthony Fensom is an experienced business writer and communication consultant with more than a decadeâ€™s experience in the financial and media industries of Australia and Asia