Global wealth capitals such as New York, Tokyo, London and Moscow have often been ranked as the most expensive cities in the world over the past decades by various rankings and surveys.
However, a somewhat surprising and unlikely competitor for the title – the Israeli city of Tel Aviv – was just ranked as the most pricy city to live in by one of the most prestigious editions studying the topic.
Israel’s biggest city besides Jerusalem was declared the world’s most expensive one to live in by the newly published biennial report on the ranking of the Economist Intelligence Unit (EIU), a business research service of UK-based edition The Economist.
Tel Aviv moves up thanks to vaccination and exchange rate growth
After it was ranked fifth in last year’s ranking of the EIU, Tel Aviv, a city of nearly 500,000 and the center of a metropolitan area of 3.8 million people, has now come on top.
The EIU made it clear that the shift is primarily due to the growing value of the shekel, the Israeli currency, which has soared vs. the US dollar due to Israel’s highly successful vaccination campaign against COVID-19.
As of November 30, 2021, a total of 62% of Israel’s population has been fully vaccinated, with the country having one of the fastest vaccine rollouts in the world.
In the first 10 months of 2021, the Israeli shekel gained a 4% increase vis-à-vis the US dollar even though some of those gains were lost in November.
The latest research of the EIU surveyed prices more than 200 goods and services in a total of 173 major world cities to compile the ranking.
In Tel Aviv, about 10% of the products and services became more pricy over the past year.
Two US cities in Top 10
The 2021 EIU top 10 ranking of the most expensive cities in the world includes two American cities, New York City at No. 6 and Los Angeles at No. 9.
Switzerland is the only other country with two cities in the top 10: Zurich is fourth and Geneva is seventh.
Paris, the French capital, dropped from first in 2020 to the second spot, which it splits with Singapore.
Italy’s capital Rome, which was third last year, has now dropped out of the top 10 most expensive cities due to a steep decline of its clothing and grocery prices.
Only one Chinese city is among the ten most expensive in the world, and that is Hong Kong, technically a self-governing autonomous district of China.
The remainder of the ranking’s top 10 is made up of Copenhagen, Denmark, at No. 8 and Osaka, Japan, at No. 10.
Growing inflation
The EIU registered a combined total inflation rate of 3.5% for the prices of the 200 products and services that it tracks for the most expensive city ranking, compared with an increase of 1.9% last year.
The inflation has been caused by supply chain problems, consumer demand shifts, and changes in currency exchange rates, according to the EIU.
According to the unit’s head of worldwide cost of living, Upasana Dutt, inflation is expected to grow thanks to rising pay in many of the cities in question over the next year.
At the same time, however, price increases are likely to be moderated thanks to central banks moving to raise interest rates.