Hong Kong ranked fourth costliest city in the world

Bloomberg and staff reporter

Hong Kong moved up a notch to fourth place among the cities with the highest living costs this year despite the relatively moderate inflation, a report by the Economist Intelligence Unit showed.

Many countries worldwide are struggling with a cost-of-living crisis, the impact of which is clear in the EIU's latest Worldwide Cost of Living survey.

WCOL have risen by an average of 8.1 percent in local-currency terms over the past year in the world's biggest cities.

This is at the fastest rate for at least 20 years, which Upasana Dutt, head of worldwide cost of living at EIU, said reflected a global crisis sparked by the war in Ukraine, ongoing Covid-19 restrictions in China, rising interest rates and exchange-rate shifts.

The survey - conducted between August 16 and September 16, 2022 - tracks the prices of more than 200 goods and services in 172 cities worldwide.

In previously published WCOL rankings, Hong Kong consistently ranked near the top, at second, third and fifth in 2019, 2020 and 2021, respectively.

However, Asian cities tended to escape the steep price rises seen elsewhere, with the average increase in the cost of living at 4.5 percent.

The six most expensive Chinese cities all rose up the ranks, with Shanghai entering the top 20. But Tokyo and Osaka dropped 24 and 33 places, respectively, as interest rates stayed low.

The combination of two factors - high incomes and a stronger exchange rate - has propelled Singapore and New York City to the top of the WCOL rankings for 2022, making them the most expensive cities in the world, pushing last year's top-ranked Tel Aviv into third place.

The most rapid price increase in the WCOL index was for gasoline, which has risen by 22 percent year-on-year on average in local-currency terms amid higher global oil prices and a stronger US dollar.

Inflation for food and household goods has also been high amid trade restrictions, caused partly by the war in Ukraine.

By contrast, prices for recreational goods and services have been subdued; this may reflect softer demand as consumers focus on spending on essentials.

According to the EIU, the good news is that prices may start to ease in some countries as interest rates bite and the global economy slows.

Additionally, supply-chain blockages should also start to ease as freight rates come down and demand softens.

Unless the war in Ukraine escalates, EIU predicts that commodity prices for energy, food and supplies such as metals will fall sharply in 2023 compared with 2022 levels, although they are likely to stay higher than previous levels.

Overall, the research group forecasts that global consumer price inflation will fall from an average of 9.4 percent this year to a still-high 6.5 percent in the coming year.