Mumbai, Delhi among world’s cheapest cities

A high inflation rate may be hitting Indians hard but a global survey has ranked two Indian cities -- the financial hub Mumbai and the national capital New Delhi -- among the four least expensive places across the world.

As per the worldwide 'cost of living' survey by Economist Intelligence Unit (EIU), Mumbai ranks as the second least expensive city globally, while New Delhi comes in at the fourth place.

Karachi in Pakistan is the cheapest destination globally, according to the survey, while Zurich in Switzerland is the most expensive place across the world.

Of the four cheapest locations named in the survey, three are from the Indian subcontinent namely – Karachi, Mumbai and New Delhi. The fourth is Tehran in Iran.

Though inflationary pressures figure among the key concerns the government and citizens for many months now, the rate of inflation has fallen somewhat in the recent past.

India's headline inflation was down to 6.55 per cent in January 2012 from 7.47 per cent in December 2011 (See: Wholesale price inflation down at 6.55 per cent in January). http://www.domainb.com/economy/general/20120214_annual_rate.html

The drop in inflation in January, however, did not prevent finance minister Pranab Mukherjee from observing that the rate of price rise was "still not at acceptable level" as he hoped for a further dip.

For most of 2010 and 2011 headline inflation was near double digit. The Reserve Bank increased key policy rates 13 times, totaling 350 basis points between March 2010 and October 2011, to rein in inflation.

"India has been such a target of labour outsourcing, relocation and FDI over the last decade," EIU said.

"With cheap labour and land costs making India and Pakistan incredibly attractive to those bargain-hungry visitors or investors willing to brave some of the security risks that accompany such low prices, especially in Pakistan," it added.

The four cheapest cities have retained their positions from the previous year's list, but Zurich toppled Tokyo as the world's most expensive city, although both of them have become relatively expensive in the past one year.

"Both Japan and Switzerland have seen strong currency movements over the last few years which have made them relatively more expensive," EIU said.

The report names Muscat, Dhaka, Algiers, Kathmandu, Panama City and Jeddah among the least expensive cities after Karachi, Mumbai, Tehran and New Delhi.

The list of 10 most expensive cities names Geneva, Osaka Kobe, Oslo, Paris, Sydney, Melbourne, Singapore and Frankfurt after Zurich and Tokyo.

The survey compared over 400 individual prices across 160 products and services, including food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

The report added that the main reason for the low cost of living in the Middle Eastern cities was the use of price controls and the pegging of currencies to the US dollar.

The list this year features cities from the Asia Pacific region (including Australasia) in the 10 most expensive cities, even as three of the four cheapest cities are located in the Indian subcontinent.

"Although Asian hubs are making their presence felt at the top of the cost of living stakes, another kind of Asian hub is making its presence felt at the bottom, EIU said.

Singapore's presence among the top 10 most expensive cities highlights a shift away from Western Europe towards Asian hubs, the report said.

According to the EIU, cities from the Asia Pacific region (including Australasia) now made up half the 10 most expensive, adding Western Europe still accounted for 24 of the most expensive cities in the top 50, with 14 hailing from Asia.

A better perspective of the rankings can be gained by the following table which lists some of the cheapest cities along with their index.  The highest index in EIU's report is 170, for Zurich, which now ranks as the world's most expensive city.

•     Muscat, Oman: 63
•     Dhaka, Bangladesh: 61
•     Algiers, Algeria: 59
•     Kathmandu, Nepal: 58
•     Panama City, Panama: 58
•     Jeddah, Saudi Arabia: 57
•     New Delhi, India: 56
•     Tehran, Iran: 54
•     Mumbai, India: 52
•     Karachi, Pakistan: 46