Singapore now world’s most expensive city

Singapore has topped Tokyo to become the world's most expensive city, according to a cost of living survey from the Economist Intelligence Unit (EIU).

In its 2014 Worldwide Cost of Living Survey, the EIU said the world's ten most expensive cities to live in are: Singapore, Paris, Oslo, Zurich, Sydney, Caracas, Geneva, Melbourne, Tokyo and Copenhagen, respectively.

(Read more: Singapore to tax sin instead of the wealthy)

Singapore, which was the world's 18th most expensive city ten years ago, has steadily crept up the rankings on the back of a strong currency, the high cost of owning a car and soaring utility bills.

Justin Seah | Flickr | Getty Images

"Car costs have very high related certificate of entitlement fees attached to them, which makes Singapore significantly more expensive than any other location when it comes to running a car," the EIU said in its report.

"As a result, transport costs in Singapore are almost three times higher than in New York. In addition, as a city-state with very few natural resources to speak of, Singapore is reliant on other countries for energy and water supplies, making it the third most expensive destination for utility costs," it added.

And according to the EIU, Singapore is also the most expensive place in the world to buy clothes given an influx of luxury brands and expensive shopping malls and boutiques.

(Read more: Cost of living a major worry for young Singaporeans)

The EIU's cost of living survey is a relocation tool that uses New York, the world's 26th most expensive city, as a base. The survey compares prices on a range of goods and services such as food, drink, clothing, rent and utility bills across 131 cities.

A high cost of living has become a contentious issue in Singapore, a wealthy Southeast Asian city, which has one of the biggest wealth gaps in the developed world in terms of its Gini coefficient.

Value in Singapore: Pro
Value in Singapore: Pro

Meanwhile, Japan's capital city Tokyo was pushed off the top of the cost of living ranking on the back of weakness in the yen, which fell just over 20 percent against the dollar last year.

And while one Asian city ranked as the most expensive in the world, another ranked as the world's cheapest.

Mumbai, India's financial center, followed by Karachi and New Delhi, were the top three least expensive cities in the world, the EIU said.

(Read more: Do rising Singapore bankruptcies signal trouble ahead?)

"Mumbai's title as the world's cheapest city and is a reflection of the structural factors that define price within the Indian subcontinent," it said in the report. "Although India has been tipped for future growth, much of this is driven by its large population and the untapped potential within the economy."

(Watch: Most expensive city? New York's not even in the top 20)

— By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter @DharaCNBC