This annual study analyses the cost of living, wages and purchasing power for expatriates and ordinary residents across 104 major cities in the world. There is no clear-cut pattern in the geographical distribution of cities in terms of their cost of living for expatriates but a clear pattern in the geographical distribution of cities for ordinary residents. Such difference is a result of the assumption that expatriates gear towards high-end imports, such that local factors have little impact on their cost of living. However, for ordinary residents, cities in the West are generally more expensive than cities elsewhere in the world. This is because of higher labour costs in the West, which makes non-tradable services much more expensive in the West, resulting in a higher cost of living.

The top five cities with the highest purchasing power are Geneva, Copenhagen, Vienna, Zurich and Detroit. Ordinary residents that live in a country with a high cost of living may still be able to afford more goods and services as compared to ordinary residents who live in a country with a low cost of living because of their relatively higher wages. One such example is Zurich where despite its high cost of living for ordinary residents, coming in second, it still has the fourth-highest purchasing power for its ordinary residents. The study on purchasing power, therefore, provides an alternative measure and allows for a more comprehensive analysis.

By NG, Wee Yang