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Luxury housing in West Kowloon. The city tied Zurich in placing just behind top-ranked Singapore in the study. Photo: EPA

Strong currency propels Hong Kong to second in latest ranking of world’s most expensive cities

Twice-annual study by Economist Intelligence Unit finds both Chinese and American cities climbing after volatile year

Stronger Hong Kong and US dollars have driven up cost of living in the city by 12 per cent, according to the latest Economist Intelligence Unit survey on the subject.

Their exchange rate moves in recent months were not the only factor pushing up Hong Kong’s global cost of living index to joint second, as food prices contributed to the showing.

However, the two currencies were driving factors behind the volatile ranking changes, with Chinese and American cities climbing the worldwide cost of living index and Australian cities reversing a trend of high prices.

READ MORE: Hard living: Hong Kong scores 70th in rank of world cities, lags Singapore

Simon Baptist, the Singapore-based chief economist at the unit, said the strong US and Hong Kong currencies this year had been “the major factor” affecting the rankings, noting cost of living had gone up on average around the world “by 12 per cent” as a result.

Food prices in most places had declined, but Baptist said on average food had become “more expensive in Hong Kong”.

By a small margin, Singapore remained the most expensive place to live, followed by Zurich and Hong Kong, the latter of which climbed seven places to tie the Swiss banking hub for second place.

Mainland Chinese cities continued their ascent in the rankings. Downtown Shanghai was now as pricey as Tokyo.

Both Hong Kong and mainland cities did not escape from rising food prices.

Baptist noted much of Hong Kong’s food came from the mainland and that food prices there had been “rising more strongly” than in any other places not subjected to the same downward forces.

The twice-yearly study, measured in US dollars, examined 400 prices across 160 products and services in cities around the world. These included food, alcohol, entertainment, clothing, transport, utilities, private schools and home rents.

READ MORE: What you can buy for the price of a Hong Kong flat: an Italian castle, a Sydney apartment with harbour view or a Dublin townhouse

The survey was designed to assess material cost of living as it related to compensation packages for expatriates, the think tank said.

Jon Copestake, the report’s editor, said falling commodity prices had created “deflationary pressures in some countries” but in others currency weakness caused by these developments had led to “spiralling inflation”.

Only eight of the 133 surveyed cities had seen their ranking position stay the same in the last 12 months.

The survey used New York as its base city, carrying an index of 100 with all other cities compared to the American metropolis.

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