Caracas, the capital of Venezuela, is the world’s cheapest city for the year 2019, according to The Economist Intelligence Unit. Syria’s capital, Damascus, is the second cheapest, followed by the Central Asian cities of Tashkent and Almaty.
Three Indian cities are also among the top ten. The Worldwide Cost of Living survey includes 133 cities worldwide, with inflation and currency fluctuations playing a major role in determining these rankings.
Ten Cheapest Cities for 2019
The ten cheapest cities in the world include seven Asian cities, with four of them being from South Asia. Two cities are from South America, while Lagos is the only African city in the top ten. The ten cheapest cities, along with their index scores, are as follows.
- Caracas (Venezuela) – 15
- Damascus (Syria) – 25
- Tashkent (Uzbekistan) – 33
- Almaty (Kazakhstan) – 35
- Bangalore (India) – 39
- Karachi (Pakistan) – 40
- Lagos (Nigeria) – 40
- Buenos Aires (Argentina) – 41
- Chennai (India) – 41
- New Delhi (India) – 43
Venezuela’s economic turmoil has contributed to Caracas overtaking Damascus as the cheapest city from last year. Venezuela experienced hyperinflation of nearly 1,000,000 percent in 2018, following which the country introduced a new currency – the bolivar soberano – but uncertainty has remained high, and commodities such as clothing and jewelry are being used as mediums of exchange.
Similarly, Syria’s economy has been disrupted by war for over eight years now. Despite the country experiencing 28 percent inflation during 2017, the decline in the value of the Syrian pound has meant that Damascus remains among the cheapest cities when ranked in terms of US dollar.
While the cheapest cities offer far greater value for money, they do not come without various types of risks. Political turmoil and security are major challenges for many of these cities. Infrastructure and the decaying environment are further issues that make most of these cities “less livable” compared to expensive cities.
Cheapest Cities by Category
South Asian cities have traditionally been the cheapest cities in most categories, but it is not always the case in recent years. Among the ten cheapest cities, the average price of 1kg loaf of bread is the lowest in Damascus at $0.60 followed by Caracas at $0.77. A men’s two-piece business suit costs the cheapest, on average, in India’s Bangalore at $140, with Chennai ($174) being the next cheapest. The price of a women’s haircut is the least in Caracas by some distance at $1.77 followed by Damascus ($7.77).
Cities with a Declining Cost of Living
Argentina’s capital, Buenos Aires, and Istanbul in Turkey both moved up 48 ranks each in the past year to become the 8th and 14th cheapest cities respectively. The Argentine peso weakened sharply against the US dollar owing to economic difficulties. There was a similar sharp decline in the value of the Turkish lira against the US dollar.
Such currency crises as the above are typically explained by factors such as external imbalances, poor policymaking, and political instability. The Brazilian cities of Sao Paulo and Rio de Janeiro also moved up 30 and 26 ranks in the index respectively.
Global Cost of Living
Taking New York as the base city, the global cost of living has fallen to 60 percent this year from 73 percent last year, according to the report. This represents a steep decline in the average cost of living in the surveyed cities, which stood at 89 percent ten years ago, and 82 percent five years ago. This is partly explained by the slow global economic growth, which is predicted to continue in the remaining 2019 and through 2020. Oil prices and the US-China trade war are among the most important factors predicted to affect growth and inflation in the year ahead.
The rankings are based on a bi-annual survey by The Economist Intelligence Unit comparing over 400 individual prices for 160 goods and services in each of the 133 cities included in the survey. These include food, clothing, home rents, utility bills, transport, personal care items, recreation, and private schools, among other categories. The gathered prices are then converted into the US dollar and are weighted identically across all cities to create a comparative index.
You can download the Worldwide Cost of Living 2019 report after registering on The Economist Intelligence Unit website.
Categories: Global Rankings