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Mercer's 2009 Cost of Living survey highlights - Global

Last updated: 7 July 2009


Global overview
Asia Pacific
Europe, Middle East & Africa

City rankings

Top 50 cities: Cost of living

  • Tokyo knocks Moscow off the top spot as the most expensive city for expatriates; Johannesburg is the cheapest

  • Asian and European cities dominate the top 10

  • Significant currency fluctuations and strengthening of dollar cause major reshuffle in the ranking

  • London drops 13 places to rank 16, New York joins the top 10 list


Mercer Cost of living video - click to play


We sat down with Nathalie Constantin-Metral to discuss the Cost of Living Survey results for 2009

Mercer's Cost of Living survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowance for their expatriate employees.


In Mercer’s survey, New York is used as the base city for the index and scores 100 points, all cities are compared against New York and currency movements are measured against the US dollar. Tokyo scores 143.7 points and is nearly three times as costly as Johannesburg with an index score of 49.6.


The period from March 2008 to March 2009 has been characterised by an unprecedented economic downturn. The global economic crisis has had a direct impact on the Cost of Living indices in the various locations covered by Mercer, and hence on the resulting Cost of Living rankings.


Video (4:25 min) - click on the image to view our videocast discussing the 2009 cost of living results


For the most part, the fluctuations have been the result of important currency fluctuations and less so by price movements.

Price movements

Up until September and October 2008, we observed a substantial increase in prices of basic consumption items and energy in many parts of the world. In the last few months of 2008, there was a sharp reversal of this trend which continued into the early part of 2009. The March 2009 Cost of Living survey revealed a substantial decrease in petrol prices and a stabilisation of prices for many basic items in most of the locations. Inflation as measured by Mercer’s cost of living surveys shows relatively low levels of inflation globally.


The global economic downturn has dramatically changed many real estate markets. Some residential rental markets have been impacted by the credit crisis causing prices to decrease. Markets show signs of weakening as a result of increasing supply. The stock of properties for rent has increased as many new developments are difficult to sell and property owners decide to rent. Another reason for falling prices is rising unemployment and its consequence is decreasing demand.


On the other hand some markets react in the opposite way, because it is more difficult to get mortgage to buy property, people prefer to rent causing rising demand and as a result increasing prices.

Currency movements

The period from March 2008 to March 2009 was characterised by important currency fluctuations; in particular the US dollar strengthened against a number of currencies worldwide while the Euro weakened to the US dollar. The Euro has lost almost 13% against the US dollar and to currencies pegged to the US dollar. During the same period, the British pound has lost more than 26% against the US dollar.

Consequences of the currency movements on the expatriate compensation

Currency movements have a direct impact on the Cost of Living index. To illustrate this point, let us consider a transfer from Washington DC to London. In March 2008 the Cost of Living index Mean to Mean index was 140 (with Washington DC as 100). In March 2009, following the loss in value of the British pound to the US dollar, the Cost of living index dropped to 103 to reflect the increase in purchasing power of the USD in GBP terms (in the timeframe from March 2008 to March 2009, the USD has gained 35.9% against the GBP).


However, the important point is that for the assignee in London, despite this tremendous drop in the COL index, there was NO decrease in the combined spendable income and cost of living allowance in GBP terms. In other words, the same spendable income in USD adjusted by the new lower COL index and converted at the new exchange rate gives the stable host purchasing part as shown in the table below.


Transfer Washington DC to London - illustration of the impact of the Cost of Living index and host purchasing of goods and services


Dates Annual Gross Base salary (USD) Spendable Income Net (USD) COL Index Mean to Mean Exchange rate USD 1 = GBP Exchange rate variation (%) Spendable Income adjuster by COLA (USD) Spendable Income adjusted by COLA & exchange rate (GBP)
March 2008 80,000 26,000 140 0.509485 36,960 18,831
March 2009 80,000 26,000 103 0.692490 35.9% 27,192 18,830


It is important to note that if the employee is not paid in home country currency, but is paid instead in GBP the assignee can suffer an important drop in savings in home country currency terms, normally these loses should be reconciled.

Top 5 cost of living ranking for cities worldwide

Top 5 cities - Overall

  • Tokyo, Japan (1st)
  • Osaka, Japan (2nd)
  • Moscow, Russia (3rd )
  • Geneva, Switzerland (4th)
  • Hong Kong, Hong Kong (5th)

Top 5 cost of living ranking cities by region

Top 5 cities - Americas

Top 5 cities - Asia Pacific

Top 5 cities - Europe

Top 5 cities - Middle East & Africa

  • New York City, US (8th)
  • Caracas, Venezuela (15th)
  • Los Angeles, US (23rd)
  • White Plains (31st)
  • San Francisco, US (34th)


The lowest ranking Americas city in the top 50 is Chicago (50th).

  • Tokyo, Japan (1st)
  • Osaka, Japan (2nd)
  • Hong Kong, Hong Kong (5th)
  • Beijing, China (9th)
  • Singapore, Singapore (10th)


The lowest ranking Asian city in the top 50 is Guangzhou (23rd).

  • Moscow, Russia (3rd)
  • Geneva, Switzerland (4th)
  • Zürich, Switzerland (6th)
  • Copenhagen, Denmark (7th)
  • Milan, Italy (11th)


The lowest ranking European city in the top 50 is Berlin (49th).

  • Tel Aviv, Israël (17th)
  • Dubai, UAE (20th)
  • Abu Dhabi, United Arab Emirates (26th)
  • Douala, Cameroon (27th)
  • Lagos, Nigeria (32nd)


The lowest ranking Middle Eastern or African city in the top 50 is Beirut (41st)


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Key features and benefits

To encourage mobility and to manage your international assignment costs, you need precise information to calculate fair, consistent expatriate compensation packages. With offices in 41 countries and territories, Mercer brings you factual, objective price information from more than 290 cities around the world.


Based on over 200 goods and services, our semi-annual surveys are conducted by professional researchers simultaneously in each of the 290 locations we cover. Carefully chosen vendors reflect only those outlets where your expatriates can buy goods and services of international quality.


  • A unique international basket of goods and services reflecting realistic spending habits established through years of extensive expatriate research

  • Three distinct cost of living (COL) indices for different expatriate shoppers:

- Mean-to-Mean Index
- Efficient Index
- Convenience Index

  • An online Cost of Living Index Calculator that allows you to customise the COL index to your specific need

  • Reasonable, realistic indices

  • Full price list and survey details

  • Immediate estimation of the cost of living allowance (COLA) using our Cost of Living Allowance Calculator

  • Current information, with locations extensively surveyed twice a year by professional researchers

  • More frequent updates for markets in flux

  • Special cities surveyed upon request

  • A methodology that lets you determine competitive purchasing power for all your employees, wherever they come from

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