Contrary to the trend observed last year the gap between the world's most and least expensive cities now seems to be widening.

Yvonne Traber, a principal and research manager at Mercer, commented: "Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year's rankings.

"Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and India are creeping up the list. Conversely, some locations such as Stockholm and New York now appear less costly by comparison.

"Our research confirms the global trend in price increases for certain foodstuffs and petrol, though the rise is not consistent in all locations. This is partly balanced by decreasing prices for certain commodities such as electronic and electrical goods. We attribute this to cheaper imports from developing countries, especially China, and to advances in technology.

"Keeping on top of the changes in expatriate cost of living is essential so companies can ensure their employees are compensated fairly and at competitive rates when stationed abroad.

"In some cases, cost of living increases may be correlated to countries with a high rate of economic growth. Companies may assign high priority to expansion in these economies but may have to deal with inflationary pressures due to competition for expatriate-level housing and other services, as observed in our surveys," she noted.

Mercer's 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 allowances for their expatriate employees.

We sat down with Ulrico Lucchi to discuss the Cost of Living Survey results for 2008.    View our webcast NB: This videocast is provided by our sister site imercer.com

Key features and benefits of Mercer's Cost of Living survey reports

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 over 250 cities around the world.

Based on more than 200 goods and services, our semi-annual surveys are conducted by professional researchers simultaneously in each of the 250 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

• Immediate estimation of the cost of living allowance via our online Cost of Living Index Calculator that allows you to customise the COL index to your specific needs
  
• Reasonable, realistic indices
  
• Full price list and survey details
  
• 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
  

Learn more and purchase cost of living survey reports

Read the global cost of living press release

Cost of living top 5 ranking cities by region

Cost of living top 50 cities

Base City: New York, US (= 100)

Please note: The Cost of Living Indices below have been prepared specifically for the purpose of the press release. The indices are based on Mercer's cost of living database and are modified to include housing and to reflect constant weighting and basket items. The results may differ from those calculated for Mercer's clients who use the results solely for the purpose of expatriate compensation. We do not recommend that expatriates use the figures represented here to compare their own compensation packages.

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