UBS study: «Prices and Earnings»
A comparison of purchasing power around the globe, 2010 update
Oslo, Zurich and Geneva again the world’s most expensive cities.
According to a UBS study, Oslo, Zurich and Geneva are the world’s most expensive cities once again this year, followed by Tokyo, Copenhagen and New York. The lowest prices for a broad basket of goods and services can be found in Mumbai, Manila and Bucharest.
Price levels in Auckland and Sydney have risen substantially due to the strengthening of the Australian and New Zealand dollars, putting the two cities in the top third of the 73 cities surveyed. Caracas, in contrast, has become much cheaper than it was a year ago. Inflation has been extremely high in Venezuela at +40 percent, but this was more than made up for by an almost 50 percent devaluation of the Venezuelan bolivar.
Purchasing power greatest in Zurich, Sydney and Miami
Employees in Zurich, Sydney, Miami and Los Angeles enjoy the most purchasing power from their hourly wages (after taxes). In many cities in developing nations, significantly lower wages mean that domestic wage purchasing power is still more than 80 percent lower than in Zurich. Employees in Jakarta, Nairobi and Manila had the lowest purchasing power among the cities surveyed.
The Prices and Earnings study conducted by UBS Wealth Management Research economists is published every three years. For the 2009 edition, a standardized survey was conducted of prices and wages in 73 cities around the world. For this year’s update, the price and wage data gathered in early 2009 was adjusted for cumulative inflation (for the period March 2009 to June 2010) and for exchange rate movements recorded in the interim. Average exchange rates for June and July 2010 were applied to minimize the effect of sharp day-to-day price volatility. When calculating wage indexes, we also considered the fact that economic growth stems in part from labor productivity enhancements that are passed on to employees in the form of real wage increases.
The UBS “Prices and Earnings” study 2009 and the update 2010 can be downloaded at the following Internet address: www.ubs.com/pricesearnings2010
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