The pinch is being felt by all. According to the most recent Worldwide Cost of Living Survey from eiu, our sister firm, prices have increased by an average of 8.1% in local-currency terms in major cities throughout the world over the past year, as reported by Economist.
One of the causes is Vladimir Putin’s war. Since last year, the average price of energy has increased by 29% in western Europe and 11% globally, which has been made worse by Russia’s invasion of Ukraine in February. As prices rise, so do food prices. The world’s food costs are currently rising at their quickest rate this century, despite the fact that both countries are significant producers of grains, oilseeds, and fertiliser. Another aspect is how China’s COVID-19 restrictions affect international supply chains, albeit public discontent is rising. The cost of living is rising at its quickest rate in at least 20 years, according to the poll, which compares the costs of more than 200 goods and services in more than 170 locations. The most expensive cities are shown in the chart below.
The most expensive city in the world is once again Singapore, which led the list from 2014 to 2019. New York, the survey’s benchmark city, still holds the title of the most expensive city. (Paris and Tel Aviv beat them in 2020 and 2021 respectively.) In America, where six of the top 10 movers up the table are located, including Atlanta and Boston, prices have increased. However, the two most experienced climbers are from Russia. Since 2021, St. Petersburg has moved up 70 spots to 73rd, while Moscow has increased 88 spots to 37th. According to the survey, local prices have increased as a result of Western sanctions implemented after Russia invaded Ukraine. Inflation in local currency terms is currently 17.1% in Moscow and 18.1% in St. Petersburg and has reached 19.4%.
Russian cities at least could be inspected without fear. The war prevented its correspondents from travelling to Kyiv to gather price data, just as it did with eiu’s liveability index earlier this year; the Ukrainian capital is not included in the ranking this year. To avoid skewing the rankings, Caracas, the capital of Venezuela, was also left out, despite the fact that its year-over-year price increase of 132% in local currency is an improvement over the year’s hyperinflation of almost 25,000%. Syria’s capital city of Damascus continues to be listed last, quite a ways below Tripoli, the capital of Libya.
There will be some welcome news soon. As demand softens and freight costs decline, supply-chain issues should start to fade. The price of 40-foot containers on popular shipping routes as measured by the Drewry World Container Index has decreased 74% year over year. In addition, eiu forecasts a decline in commodity prices for energy, food, and metals in 2019 barring an escalation in the conflict in Ukraine. Global consumer price inflation is expected to average 6.5% in 2023, down from this year’s average of 9.4%. Even if it’s still high, this ought to help struggling households in the coming year.
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