Priciest Asian city for expats: Not what you think

Namdaenum Market, Seoul
Moment Mobile ED | Getty Images
Namdaenum Market, Seoul

South Korea's capital eclipsed Tokyo to become Asia's most expensive city for expatriates, according to a new survey.

Seoul also climbed up the international ranks to the 10th position, from 22nd a year ago, ECA International's Cost of Living survey showed, overtaking London, Paris and Stockholm.

Prices of items in ECA's shopping basket increased in South Korea at a faster rate this year than last year, ECA said in a press release, despite overall inflation remaining benign. In November, consumer prices rose an annual 1 percent, their slowest pace in nine months, and well below the central bank's target 2.5 to 3.5 percent range.

Read MoreIs South Korea headed for Japan-style deflation?

"What has had more of an impact on costs for many employees on assignment [in Seoul] is the appreciation of the won," the consulting firm said.

The Korean currency has strengthened nearly 10 percent against the Japanese yen in the past twelve months and more than 5 percent against the euro during the same period.

ECA's calculations of living costs are based on a basket of daily goods, such as food, household goods, leisure services, clothing, restaurant prices as well alcohol and tobacco. Rent, utilities, car purchases and school fees are not included as they tend to be compensated separately in expatriate packages.

Read MoreHow millennials are shaking North Korea's regime

Japan moves down the list

ECA now ranks Tokyo the 12th most expensive city globally as Prime Minister Shinzo Abe's fight against deflation seems to be taking effect. Just two years ago, the Japanese capital topped the list.

"Economic policies to counter deflation in Japan have contributed to the price of goods and services in ECA's shopping basket rising around 4 percent, more than 5 times the rate they did twelve months ago," the firm said.

Read MoreJapan elections: 5 things you need to know

"Another impact of Abenomics is that the yen has depreciated significantly against other major currencies, and this has more than outweighed any inflation," ECA added.

Consumer inflation slowed to its lowest level in a year in October, while the yen has depreciated 12 percent against the U.S. dollar year-to-date.

China on the rise

On the heels of Seoul and Tokyo are the Chinese cities of Shanghai and Beijing, ranked 14th and 15th on ECA's list, respectively.

Data this week showed Chinese consumer prices eased to a five-year low in November, but ECA said the price of items in its shopping basket rose faster in 2014 than the previous year.

"As the imported goods and brands expatriates are familiar with become more readily available, particularly in the second tier cities, this is also contributing to price rises within our basket since these items are usually more expensive than the local brands," the survey said.

Read MoreChina to banks: We need your help

Caracas maintained its position as the world's most expensive city for expats for the second year in a row, followed by Luanda and Oslo.