Buenos Aires is the cheapest city to live in all of America and the ninth in the world. Rampant inflation and the depreciation of the local currency against the value of the US dollar continues to position the Argentine capital on the list of places with the lowest cost of living, even below Caracas -the capital of Venezuela- according to the Worldwide Cost of Living 2021 (WCOL 2021) by The Economist Intelligence Unit (EIU).
The index, published each year, compares prices in all cities to those in New York, in US dollars, which is why those places where the currency is strongest tend to appear among the first places. On the contrary, cities such as Buenos Aires and other African and Asian capitals are the ones with the greatest exchange rate depreciation.
Blockages in supply chains, swings in exchange rates and shifting consumer demand, buffeted by the coronavirus pandemic, have pushed up the cost of living in many larger cities, according to the index released today, and the Average inflation is the highest recorded in the last five years.
But the EIU makes a caveat in its report: “On average, across all cities for which we have comparable data (excluding four cities experiencing hyperinflation or very high inflation, namely Caracas [Venezuela], Damascus [Syria], Buenos Aires and Tehran [Iran]), the prices of goods and services covered by the WCOL have increased by 3.5% in local currency terms, compared to an increase of only 1.9% in the same period of the last year".
In the list of the 10 cheapest cities in the world, Buenos Aires is positioned only above Lusaka (Zambia), and is more expensive than Damascus (Syria), Tripoli (Libya), Tashkent (Uzbekistan), Tunis (Tunisia), Almaty (Kazakhstan), Karachi (Pakistan), Ahmedabad (India) and Algiers (Algeria).
In last year's data, the Argentine city was positioned better than Caracas, in Venezuela, but this year that changed.
Although Caracas does not stand out among the first ten cheapest, as it did in 2020 -now it appears in position 125 among 173 cities-, The Economist dedicates a section to it, when comparing it with Tehran, the capital of Iran, which was the city that climbed the most in the index compared to last year -it went from position 106 to 79-, given the strong impact that international sanctions had on the cost of living for Iranians.
“We estimate that the WCOL basket of goods and services in Tehran is up 42% in local currency terms since November 2020, which is similar to the country’s official consumer price inflation rate of 44%. %. These price rises, however striking, are nothing compared to the hyperinflation in Caracas, the Venezuelan capital. Our WCOL basket for the city is up 1766% in the last year, although Caracas remains a cheap city to live in, ranking 125th,” the report says.
The ranking is headed by the Israeli city of Tel Aviv, which for the first time is established as the most expensive in the world, surpassing last year's leader, Paris, which now ties in second place with Singapore.
The EIU attributes Tel Aviv's positioning to increases in food and transportation prices, and the strengthening of the Israeli shekel (local currency) against the US dollar.
The third most expensive place in the world is Zurich (Germany), followed by Hong Kong, New York (United States), Geneva (Switzerland), Copenhagen (Denmark), Los Angeles (United States) and Osaka (Japan).
Most US cities fell in the rankings compared to last year, after the Joe Biden administration responded to the Covid-19 pandemic by pumping more money into the economy. "This supported the value of the US dollar, compared to European and Asian currencies," they explained from the EIU.
The WCOL 2021 maps the cost of living in 173 cities around the world, 40 more than last year, and compares the price of more than 200 everyday products and services. It has been carried out for more than three decades by a global team of researchers, who each year collect data on a list of more than 200 products and services, including the prices of food, clothing, drink, cleaning supplies, transport, utility bills, school fees and leisure expenses.
Prices shown are not manufacturer's or recommended retail prices, but actual costs charged. Economists convert that data to a central currency (in this case, the US dollar), using the prevailing exchange rate, and weight it relative to the numbers for New York, the base city.
This year, transportation was one of the items that experienced the greatest increase in prices, with the cost of a liter of fuel up to 21% more expensive than last year in the cities studied.
Upasana Dutt, director of the study, said in a statement: “Although most economies around the world are recovering as Covid-19 vaccines are rolled out, many major cities continue to experience spikes in cases, generating social restrictions. These have disrupted the supply of goods, leading to shortages and higher prices.”
The 10 most expensive cities to live in according to the EIU report
The 10 cheapest cities to live according to the EIU report