Tel Aviv: More expensive than Chicago and Berlin

Tel Aviv may have stepped closer to being the Manhattan of the Middle East in February, according to the Economist Intelligence Unit, as it edged ever closer to being as expensive as the Big Apple itself.

According to the EIU’s biannual Worldwide Cost of Living Report, Tel Aviv is the 34th most expensive city in the world, only seven spots shy of New York, ranked 27th, and well ahead of other major international cities such as Chicago (38), Berlin (40), Washington (47) and San Francisco (64). Tokyo took the top spot, as it has several times since 1992.

The survey is intended to help employers in multinational companies calculate cost of living expenses as they transfer workers from one city to another. In that regard, its costs put Tel Aviv at a business disadvantage when compared to cities ranked lower on the list.

The survey compared more than 400 individual prices across 160 products and services, including food, drink, clothing, housing costs, transportation, utilities and recreation.

In dollar terms, the survey showed an increase in the price of bread, but reductions in the costs of rice, milk, wine, cigarettes and gasoline. If that does not seem to accurately reflect the inflation felt by everyday Israelis, there’s a good reason.

For one, the prices are converted to dollars, which means that the list also takes into account fluctuations in currency. The strong shekel would, therefore, boost up dollar-denominated prices.

For another, the items are weighted uniformly across the board, so they do not take into account the different spending habits of particular countries. While that may accurately reflect the needs of workers being shipped from one international branch of a company to another, it does not necessarily reflect the consumption habits of the native population.

Outside Tel Aviv, the survey noted a rise in Asian and Australian cities to levels once occupied mostly by European ones.

“Ten years ago, there were no Australian cities among the 50 most expensive cities,” the survey noted.

“The current survey sees Australian cities reach the highest-ranked position yet, with Sydney rated the third most expensive city surveyed and Melbourne ranked in fifth place.”

The changing composition of the top cities reflect increased globalization.

“Asian cities make up 11 of the world’s 20 most expensive compared with eight from Europe. A decade ago this was six Asian vs ten European cities, with four cities from the USA. The current ranking still fails to include any cities from North America among the 20 most expensive, despite widespread decline in the cost of living relative to US cities,” the survey said.

The cheapest cities, on the other hand, tended to be in the India subcontinent and among developing nations.

“Outside India, bargain hunters may be put off by the security risk in many of the countries in which the world’s cheapest cities are found.

Bangladesh, Pakistan, Nepal, Sri Lanka, Algeria and Iran all feature in the bottom ten, but have had well documented security issues or domestic unrest,” the report said.

Tehran came in at 122nd place out of 133, at 58 percent the cost of living in New York.