New York City takes the top spot in the annual ranking of the world’s most expensive cities, according to an analysis by UBS.
The Swiss cities were markedly more expensive than in last year’s study because of the Swiss National Bank’s decision in January to discontinue its minimum exchange rate. Prices in Japanese and European cities, meanwhile, fell over the past year as the euro and yen weakened against the dollar.
Including rent, other U.S. cities among the most expensive included Chicago (7th), Miami (11th) and Los Angeles (13th).
The cheapest cities last year among the 71 surveyed: Kiev, Ukraine, and the Bulgarian capital city, Sofia. Prices were 2.5 times higher in the Swiss cities than in those Eastern European capitals.
Of course, prices are only part of the equation: What about wages? The UBS analysis finds that residents of Zurich, Geneva and New York also earned the highest wages net of taxes, with pay that’s nearly 19 times that of Nairobi, Jakarta and Kiev. Miami ranks fifth overall in pay, according to the bank’s analysis.
So how much are those wages worth given prevailing prices? The UBS analysis looks at worldwide purchasing power and finds that, using net hourly pay, domestic purchasing power is highest in Luxembourg, Zurich and Geneva, followed by Miami and Los Angeles.
The domestic purchasing power analysis uses a basket of goods that represents the monthly consumption of a three-person family in Europe. Residents of the major cities in Switzerland can buy 20 such baskets a year, compared with 18 for the U.S., and 12 for European capitals such as London and Oslo. Residents of major cities in sub-Saharan Africa and India can buy just three every year.
Such a comparison, of course, is a bit hard to visualize, and UBS provides a different way to look at purchasing power, by looking at wage value: That is, the time someone would need to work in order to afford, say, one McDonald’s Big Mac, or one iPhone 6.
New Yorkers, for example, need to work around 24 hours to make enough money to buy an iPhone 6. That’s up from 20.6 hours for residents of Geneva, but much lower than 163.8 hours for residents of Shanghai or 334.2 hours for residents of Manila.
Working hours and time off from work represent another important contributor to purchasing power. Annual working hours exceed 2,000 in 19 major cities, mostly in Asia and the Middle East, while workers in Western Europe have the fewest hours and the most paid vacation days. One example: Residents of Hong Kong clock in for 1,000 hours a year—or four hours per workday—more than workers in Paris.
Read the full UBS survey for more, including information on the methodology.
Get WSJ economic analysis delivered to your inbox: