The Mercer Annual Cost of Living City Ranking evaluates the cost of over 200 items, including housing, transport, food, clothing and entertainment.
For 2024, the survey reveals some significant shifts in the cost of living across global cities. These changes can reflect broader economic trends, local economic policies and a host of other factors influencing living expenses. In this article, we highlight cities that have seen a sharp increase in their cost of living ranking and those that have become more affordable.
What do changes in ranking mean?
Cities experiencing a significant increase in their cost of living ranking often face higher inflation rates, housing costs and pricier goods and services. A substantial rise in a city's ranking might be driven by economic growth attracting more international talent and increasing demand and prices.
On the other hand, cities that have dropped significantly in the rankings have typically become more affordable due to factors like deflation, reduced housing costs or favourable exchange rates. For expats, this can mean lower cost-of-living adjustments and potentially more attractive assignments due to decreased expenses. Lower rankings may also reflect economic challenges that could impact your overall quality of life.
Understanding these dynamics is crucial for expats and their employers. Companies must ensure that compensation packages are adjusted appropriately to reflect these changes, helping expats manage their finances effectively and enjoy a stable standard of living, regardless of where they are posted. Let's delve into the most notable shifts in the 2024 rankings.
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- Lagos and Abuja, Nigeria (-178 and -86)
- Luanda, Angola (-128)
- Accra, Ghana (+80)
- Santiago, Chile (-73)
- Istanbul, Turkey (+55)
- Osaka, Japan (-53)
- Tirana, Albania (+50)
- Cairo, Egypt (+49)
Lagos and Abuja, Nigeria (-178 and -86)
Lagos 2023 ranking: 47
Lagos 2024 ranking: 225
Change in ranking: -178
Abuja 2023 ranking: 140
Abuja 2024 ranking: 226
Change in ranking: -86
Lagos and Abuja have plunged in Mercer's Cost of Living rankings. They have replaced Karachi and Islamabad at the bottom of the rankings, making them the most affordable expat destinations surveyed.
The removal of fuel subsidies by the new administration in 2023 caused a sharp increase in fuel prices, impacting the cost of transport in Nigeria and leading to a broader economic ripple effect.
High inflation rates, which peaked at 32 percent in early 2024, have eroded local purchasing power, but for expats, this has decreased the overall cost of living. The lower cost of living in Lagos and Abuja has made them more attractive to expats, especially those with compensation packages that benefit from the currency devaluation. Housing and utilities remain relatively expensive, but the overall decrease in the cost of living has balanced these expenses.
The ongoing security challenges in Nigeria have also shaped the economic landscape. However, the country's commitment to economic reforms and international relations has kept it on the radar of global businesses and expats looking for new opportunities.
Luanda, Angola (-128)
2023 ranking: 30
2024 ranking: 158
Change in ranking: -128
The city of Luanda has experienced significant changes in its cost of living ranking, dropping 128 places to 158th. An important contributor to this decline has been the substantial depreciation of the Angolan Kwanza.
Political instability and social unrest have influenced the economic environment in Angola. The aftermath of the disputed 2022 elections, coupled with ongoing political repression, has created an uncertain atmosphere.
In mid-2023, the Angolan government removed petrol subsidies, leading to a sharp increase in gasoline prices. Aside from the cost of transport, this had a cascading effect on the prices of goods and services throughout the country. The subsequent inflation spike, reaching 24 percent year-on-year in February 2024, further exacerbated the cost of living challenges in Luanda.
Accra, Ghana (+80)
2023 ranking: 178
2024 ranking: 98
Change in ranking: +80
Accra, Ghana has seen a significant rise in Mercer's Cost of Living rankings for 2024, moving 80 rank positions from 178th to 98th. An important factor has been ongoing inflation, which peaked at 54 percent in December 2022.
The Ghanaian cedi has shown signs of stabilisation against the US dollar in 2024, helping to maintain more consistent prices for imported goods. Despite this improvement, Ghana's economic growth has slowed, impacting job creation and income levels.
Additionally, anticipated increases in public expenditure ahead of the December 2024 general election could include subsidies for utilities and social welfare programmes. While these measures may provide some relief to households, they also carry the risk of inflationary pressures.
Santiago, Chile (-73)
2023 ranking: 87
2024 ranking: 160
Change in ranking: -73
Santiago has experienced a notable drop in Mercer's rankings. The country's slow economic growth in 2023, with GDP essentially stagnant, has put significant pressure on wages and employment opportunities.
One key factor in this shift has been the declining inflation rate. After peaking in 2022, inflation rates steadily decreased throughout 2023. This reduction in inflation has helped moderate the prices of goods and services, benefiting both locals and expats in Santiago by improving their purchasing power.
Another crucial development has been the aggressive interest rate cuts by the central bank of Chile, starting in late July 2023. These cuts aimed to stimulate economic growth by reducing borrowing costs, positively impacting housing affordability.
The economic outlook for 2024 appears promising, with an anticipated rebound in economic activity expected to enhance job prospects and potentially lead to higher wages.
Despite these improvements, it's important to note the persistent social challenges. Income inequality, rising prices for essential services and regional cost differences continue to impact the overall living conditions in Santiago, especially for those earning in Chilean Pesos.
Istanbul, Turkey (+55)
2023 ranking: 185
2024 ranking: 130
Change in ranking: +55
Istanbul has experienced a notable rise in the 2024 Mercer rankings, pulling from 185th place to 130th.
Persistent high inflation throughout 2023 and early 2024 has been a primary driver of increased living costs in Istanbul. Despite efforts to stabilise the economy, consumer prices have remained elevated, affecting daily expenses for residents and expats alike.
The depreciation of the Turkish Lira against major currencies has further exacerbated the cost of living. While this makes imports more expensive, it can benefit expats earning in stronger currencies, potentially offsetting some of the local inflation impacts.
Significant interest rate hikes by the Central Bank of Turkey, raising the policy rate to 45 percent, have increased borrowing costs. This directly affects mortgage and loan payments and contributes to higher costs of housing in Istanbul.
The government implemented wage and pension hikes before the May 2023 elections, which has provided some relief to residents who need it most. That said, these measures have not fully addressed the high living costs in urban centres like Istanbul, where the prices of essentials remain high.
Osaka, Japan (-53)
Osaka's drop in the 2024 Mercer rankings from 93rd to 146th reflects a series of economic changes in Japan over the past two years. One key factor has been the significant depreciation of the Japanese Yen, as well as moderate inflation and economic stagnation.
Wage growth in Japan has shown moderate improvement, with wages expected to grow faster than inflation in 2024. This increase in income could help expats manage the rising cost of living in Osaka, providing some relief amidst the overall economic adjustments.
Additionally, the Japanese government's new economic package, which includes cash handouts to low-income households and temporary tax cuts, aims to support the population amidst high prices. For expats, these measures, along with ongoing corporate governance reforms and subsidies for key industries, contribute to a dynamic economic environment in Osaka.
Tirana, Albania (+50)
2023 ranking: 153
2024 ranking: 103
Change in ranking: +50
Tirana, the capital of Albania, has seen a significant rise in the 2024 Mercer rankings, from 153rd in 2023 to 103rd in 2024. One of the main drivers has been the country's steady economic growth, which has fuelled increased demand for goods and services, contributing to higher living costs in the capital.
The Albanian Lek has appreciated significantly against major currencies like the euro and the US dollar. While this has made imports cheaper and helped control inflation, it has also affected the purchasing power of expats earning in foreign currencies, potentially increasing their cost of living.
Inflation has remained a concern, with rates moderating but still elevated. This persistent inflation has kept prices high for essential goods and services, impacting Tirana's overall cost of living.
The government has also implemented wage increases, raising the public sector and minimum wages by 18 percent in 2023. While intended to improve living standards, these wage hikes have also contributed to higher prices for goods and services in the city.
Cairo, Egypt (+49)
2023 ranking: 217
2024 ranking: 168
Change in ranking: +49
Cairo, capital of Egypt, has seen a significant rise in its 2024 Mercer rankings – from 217th in 2023 to 168th. One of the main factors has been the depreciation of the Egyptian Pound, which lost about half its value against the dollar in 2023, making imported goods more expensive and driving up prices in general.
Inflation has been another significant issue, soaring to 34 percent in 2023. This high inflation rate has led to substantial increases in the prices of goods and services in Egypt, with food prices alone rising by 72 percent.
The Egyptian government has implemented various economic reforms to stabilise the economy. These reforms have meant reducing subsidies on energy and food, which has increased costs for these essential items. The Central Bank of Egypt also increased key policy rates to control inflation, raising borrowing costs for consumers and businesses.
Geopolitical tensions, such as the ongoing Gaza conflict and regional instability, have further strained Egypt’s economy. These factors have affected key revenue sources like tourism and the Suez Canal, adding to the economic pressures and the high cost of living in Cairo.
