Tokyo advanced past the Angolan capital Luanda to become theworld's most expensive city for expatriates of 214 ranked byMercer, while Moscow remains the most costly place to live inEurope.

“Recent world events, including economic and politicalupheavals, have affected the rankings for many regions throughcurrency fluctuations, inflation, and volatility in accommodationprices,” Mercer said today in its annual Worldwide Cost of LivingSurvey.

The analysis uses New York as a base city and measures thecomparative prices of more than 200 items in each location, such astransport, clothing, food, household goods and entertainment.Housing costs, which are also included, are critical in the rankingas they are often the biggest expense for expatriates.

A pair of blue jeans costs $174 in Luanda while expats in Moscowpay about $9.60 for an international newspaper, Mercer said. InTokyo, a cup of coffee including service averages $8.15 and themonthly rent on a luxury two-bedroom unfurnished apartment runs$4,766, according to the consulting company.

Geneva retained its ranking as the world's fifth most expensivecity for expats, while Zurich moved up one place to sixth and theSwiss capital, Bern, gained two spots to 14 following thestrengthening of the franc against the dollar. Karachi is the leastexpensive city for expats, less than a third as costly as Tokyo,Mercer said.

Most European cities dropped in the ranking, mainly due to whatMercer called a “considerable weakening” of local currenciesagainst the dollar. The euro has lost 3.9 percent in the past sixmonths, the worst performance among the 10 developed-nationcurrencies tracked by Bloomberg Correlation-Weighted Indexes.

Oslo fell to 18 from 15 in the rankings, London dropped to 25from 18 and Paris slipped 10 places to 37. Milan, Rome, Stockholm,Vienna, Amsterdam, Brussels and Dublin all lost between seven to 14places.

“Despite some marked price increases across the region in thefirst half of last year and widespread increases in VAT charges,most European cities dropped in the ranking,” said NathalieConstantin-Metral, who compiled the data. “This is mainly due tothe unstable economic situation across Europe, which has led to thedepreciation of most local currencies against the dollar.”

Rental accommodation prices have slid in Greece and Spain, whichrequired international bailouts, as well as in Italy,Constantin-Metral said.

Bucking the Trend

Most British cities also slipped in the ranking as the Britishpound fell against the dollar, said Milan Taylor, head of Mercer'sdata and product services in the U.K. and Ireland.

“Birmingham and Belfast bucked the trend, moving up in theranking mainly because rental costs for expatriates increased afair bit and price increases in these cities were higher than in,say, London and Glasgow,” Constantin-Metral said in astatement.

Tel Aviv remains the costliest city for expatriates in theMiddle East, though it dropped seven places to 31, while Jeddah,Saudi Arabia, is still the cheapest in the region, at 186.Johannesburg fell 23 places to 154 and Cape Town lost 21 to rank179, “reflecting the considerable weakening the South African randhas suffered against the U.S. dollar in the last year,” Mercersaid.

Higher consumer prices also helped catapult Caracas, Venezuela,up 22 places to 29 in the ranking, though Sao Paulo and Rio deJaneiro, at 12 and 13, remain the most expensive cities forforeigners in the Americas. Venezuela's annual inflation rate stoodat 22.6 percent in May.

Osaka, Japan's third-largest city, advanced three places to No.3, followed by Singapore at 6 and Hong Kong at 9. Higher prices forgoods and a stronger yuan pushed Chinese cities including Shanghai,Beijing, Shenzhen and Guangzhou up in the rankings,Constantin-Metral said.

In New Zealand, both Auckland and Wellington jumped a “verysignificant” 62 places following “large increases in accommodationcost and demand, coupled with a stronger New Zealand dollar,” shesaid. “Demand for rental properties has also increasedsignificantly in all the Australian cities we rank. Coupled withvery limited availability, the result has been very tight marketsand increased prices.”

Along with Karachi, the cheapest cities for expatriates areIslamabad, Pakistan; Managua, Nicaragua; Bishkek, Kyrgyzstan; LaPaz, Bolivia; Tunis; and Kolkata, India, according to Mercer.

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