BBC News Mundo
The stronger a local currency is, the higher the country's cities rank on the list, and vice versa.
This means that the stronger the currency, the more expensive the city. And the weaker the currency, the cheaper the country appears in the ranking.
But in Singapore, what truly reaches an extreme luxury figure is the cost of a certificate required to buy a car: the cheapest one exceeded US$106,000 in early October.
Despite being relatively small, Singapore is often ranked as one of the countries with the highest number of millionaires in the world and therefore rarely falls out of first place: it has been ranked as the most expensive place to live in nine of the last 11 years.
The Asian country is tied with Zurich in this year's ranking. Both are considered financial capitals.
Switzerland's largest city is always expensive, especially for food, household goods, and entertainment. Zurich topped the list in 2020 and rarely falls out of the top ten.
“Its rise to the top of the index is mainly due to the Swiss franc appreciating by more than 10% against the dollar over the past year. The survey's benchmark city is New York, so if a country's currency strengthens, its cities generally rise in the rankings,” the weekly magazine explains.
The weakening dollar caused US cities to fall in the rankings this year. New York, the most expensive city last year along with Singapore, dropped to third place, tied with Geneva, another Swiss city.
According to The Economist Intelligence Unit, the global cost-of-living crisis that began in 2022 is still present in 2023, even though energy prices and supply chain problems have eased.
But inflation remains high worldwide: prices for the 200 goods and services it tracks rose by an average of 7.4% over the past year. This is slightly lower than the 8.1% recorded in 2022, but still well above the five-year average of 2.9%.
The cheapest cities
The cheapest city in the ranking remains Damascus, the capital of Syria, even though its price basket increased by 321% year-on-year in local currency terms.
The withdrawal of government subsidies and the devaluation of the currency caused import costs to skyrocket.
Also near the bottom of the ranking are Tehran (Iran) and Tripoli (Libya). Tehran's inflation rate is high, at almost 49%, while prices in Tripoli rose by just over 5% last year.
The Economist stated that the three cities are particularly cheap for groceries, as well as other household and personal care items.
And what about Latin America?
This year's study also shows that the three cities that climbed the most positions are in Latin America. These were Santiago de Querétaro and Aguascalientes in Mexico, and San José, the capital of Costa Rica.
Although this year's survey covers 173 of the world's major cities, the global average has been calculated excluding Kyiv (Ukraine) and Caracas (Venezuela), which continues to face a cycle of hyperinflation.
In the Latin American region, Mexico City ranks as the most expensive.
“In 2023, the peso proved to be one of the strongest emerging market currencies, thanks to rising interest rates and strong domestic investment,” says the economic weekly.
“Central banks across much of Latin America were among the first to follow the US Federal Reserve’s interest rate hikes to support their currencies. As a result, the Mexican peso and the Costa Rican colón strengthened,” explains The Economist.
Buenos Aires, the cheapest in Latin America
And although authorities estimate that inflation in Argentina will end the year at 180% annually, Buenos Aires is the cheapest city in the Latin America and Caribbean region.
The main reason is the devaluationsuffered by the peso.
Someone who has dollars today in the Argentine capital can get many more pesos at the exchange rate than a year ago.
“Argentina is already in that situation today: it has an unsustainable fiscal path, an overvalued exchange rate, and a very vulnerable balance of payments. Inflation has risen rapidly, while the official Argentine peso has weakened more slowly,” says Mali Chivakul, emerging markets economist at J. Safra Sarasin Sustainable AM.
“As a result, the real exchange rate has appreciated sharply since 2022. The official ARS is managed with various capital controls. The IMF estimates the real exchange rate to be overvalued at between 15% and 20%. And the parallel market offers an unofficial exchange rate up to 150% weaker than the official one,” the expert adds.
That's why, even though the population of the capital suffers intensely from an inflation cycle, its comparison with the dollar makes it so affordable.
