New York City and Los Angeles, two of the most iconic and recognizable cities in the U.S. are now in the top 10 most expensive cities in the world. Its no surprise that cities like Singapore and Hong Kong top the list yet again but what is a surprise is that New York, and Los Angeles have jumped a combined 20 places to #7 (N.Y.C.) and #8 (L.A.) in the last 12 months.
To understand the significance in being one of the world’s most “expensive” cities, it is important to first understand where these numbers come from. The study done by the Economist Intelligence Unit takes pools from a multitude of individual prices across a number of different products to determine a relative “cost of living” in various locations.
In the U.S., New York represented the most expensive city, costing 20% more on average to live than other U.S. cities and 31% more than Cleveland and Atlanta at the bottom of the list.
While the cost of living can vary greatly among cities in the same country, one of the biggest drivers for the cost of living in any area, is the exchange rate (or the relative strength or weakness) of national currency in which the city is located. And this year, highly variable exchange rates have shaken up the list quite a bit. Over the last 12 months, the value of the U.S. dollar has strengthened significantly, which means the cost of living across the U.S. on average has also risen. Inversely, Western Europe saw the cost of living drop in all 28 cities measured. In some extreme cases, like Moscow in Russia, the decline reached levels up to 40%.
So, while New York and Los Angeles have jumped significantly compared to other cities in other nations, the gap is slightly smaller inside the U.S.