It’s been a busy year for me on the road. The past few weeks have, however, been less hectic as I’ve been back in London without an airport or foreign supermarket in sight. I have to say it’s nice to spend a decent amount of time in one place and the end of ECA’s Cost of Living survey has come, for me, at the right time. I’ve managed to visit 48 cities in 34 countries in 2013 and already plans are afoot for our next survey in the first half of 2014. So why do I spend my time abroad walking up and down supermarket aisles and treading the marble of shopping mall floors? And what happens with the data I collect?
Well, essentially the outcome of all of the prices I collect is a cost of living index. This is a factor which is applied to a certain portion of an expatriate’s salary to reflect different living costs between their home location and their host location. The index is calculated by comparing the prices I collect with those from their home country. It is important to remember that when I’m out and about I am reflecting an expatriate’s day to day expenditure and not those of a local. Hence why I’m often reporting on swanky malls and boutique supermarkets, even in places where the majority of local people will shop in markets and the more omnipresent and cheaper local chain stores. This is particularly true of countries such as India and China, although the expanding middle class in both countries is ‘closing the gap’ somewhat.
I quite often write about supermarkets in my posts but there are many other types of outlet which need to be visited whilst researching in a city. Approximately half of the ‘basket’ of goods which I collect prices for can be found in supermarkets but there are many other categories including clothing, electrical goods, motoring costs, restaurants, bars and various services such as cinema, hairdressers and broadband internet. The quality and availability of brands can vary greatly throughout the world and exact like-for-like comparisons are not always possible. However, we collect a variety of prices for each item in the basket to reflect the suitable choices available. Certain expenditures such as housing costs, car purchase and school fees are not included in our indices as these are often considered separately by employers sending staff on assignment. If you would like to know more in-depth details of how ECA’s cost of living indices are created you can download a free white paper on the topic.
The September survey is now finished and all of the data has been analysed and indices produced. So, what are the results? Well, the most expensive location in the world for expatriates is Caracas, the capital of Venezuela. This may come as a surprise to some but prices have risen by 60% in the past year. It may also come as a surprise to find that the African cities of Juba (South Sudan) and Luanda (Angola) are both in the top four most expensive locations globally for expatriates. Transportation and export/import costs mean that quite often in developing countries (such as in Sub-Saharan Africa) the imported international brands favoured by expatriates have a high premium attached to them. This can often mean spending over five times more for ‘everyday’ products such as Kellogg’s cornflakes or Barilla pasta than you would in your home country. Other, less surprising, countries near the top of the ranking list include Norway, Switzerland and Denmark.
Exchange rates and currency strength often have a significant impact upon cost of living differentials too. Both Japan and Australia have become comparatively ‘cheaper’ for expatriates in the past year due to the weakening of their currencies on the global market. They are still, however, far more expensive than the cheapest place to be on assignment – Maseru, the capital of Lesotho, a small country surrounded by South Africa. Other countries towards the bottom of our ranking list include Pakistan, India, Swaziland and South Africa itself.
In January I will be heading out on the road again for the March Cost of Living survey along with ECA’s now expanded data research team. In the meantime look out for our blog posts on various subjects including festive food and drinks around the world and an insight into some of the practical challenges specific to being a woman traveller.