— This is the script of CNBC's news report for China's CCTV on December 01, 2023.
Singapore and Zurich top the ranking shoulder-by-shoulder as the world's most expensive cities, according to the latest report released by EIU on Thursday. It's noteworthy that this marks the ninth time in the past 11 years that Singapore has claimed the top. Here is the list:
Last year, New York shared the top ranking with Singapore but has now dropped to the third position, tied with Geneva. Other cities in the top ten include Hong Kong, Los Angeles, Paris, Copenhagen, Tel Aviv, and San Francisco. Overall, there are two Asian cities, four European cities, three American cities, and Tel Aviv in Israel.
The report indicates that Singapore has the highest transportation costs in the world, primarily referring to car-owning costs. Given its limited space, Singapore implemented a Vehicle Quota System in 1990 to alleviate traffic pressure, and since 2018, it has strictly controlled the growth in the vehicle population.
Senior Analyst at Economist Intelligence: EIU
"Singapore actually stand out in transport costs. But this is not because of public transport, but because of car prices. With the system of the certificate of entitlement or COE that pushes up car prices, it's really a matter of having limited resources and high demand."
Another noteworthy aspect is the shelter costs in Singapore. A recent report from the real estate consultancy firm Knight Frank reveals that as one of the hubs for global professionals, Singapore has experienced a surge in demand for housing, leading to a cumulative rental increase of 50% since 2021. However, the consultancy firm also predicts that with the completion of new residential constructions in the coming months, rental prices in Singapore may slow down.
The report also highlights that prices in various categories in Singapore remain high, including groceries, drinks, and clothing. Analysts point out that in a limited space needing to accommodate many high-earning professionals, demand-driven inflation is a natural occurrence. Analysts also caution that Singapore's consumption tax will increase again starting next year, which could further push up prices here. As for Zurich, the report attributes the rise in the cost of living to the strength of the Swiss Franc and the sharp increase in prices for groceries, household, and entertainment.
Looking at the global perspective, EIU's report indicates that the average prices in major cities worldwide increased by approximately 7.4% in 2023. This represents a slight moderation compared to last year's 8.1%. However, such a growth rate is still significantly higher than the trend from 2017 to 2021. In various categories, utility prices, including energy and water bills, experienced the slowest growth, reflecting a gradual easing of the impact of the Russia-Ukraine conflict on energy prices.
On the other hand, prices for groceries continued to rise, indicating persistent global food inflation. Many manufacturers and retailers have passed on the high costs to consumers, and the frequent occurrence of extreme weather events has increased supply-side risks.
Analysts predict that global inflation is expected to continue slowing in 2024, and the lagging effects of global central bank tightening actions will gradually become apparent, potentially impacting consumption. Furthermore, we need to pay attention to the impact of geopolitical conflicts in the Middle East on energy prices and the possibility of the El Nio phenomenon pushing up food prices as upside inflation risks.