The cost of living in Kathmandu is higher than in New Delhi, Bombay (Mumbai), Bangalore and Karachi, a new report says.

The Nepali capital secured 116th position in the league table of the world’s most expensive cities prepared recently by the Economist Intelligence Unit, the research and analysis division of The Economist Group, a sister company of The Economist, one of the world’s well-acclaimed newspapers. This ranking is shared by Johannesburg, the largest city in South Africa. Kathmandu was ranked 118th in the list of the world’s most expensive cities last year.

With the latest ranking, Kathmandu has become the third most expensive city in South Asia after the Bangladeshi capital of Dhaka and the Sri Lankan capital of Colombo. Dhaka has taken 62nd spot in the global list of world’s expensive cities, while Colombo has secured 108th position.

A total of eight South Asian cities, including New Delhi, Chennai, Mumbai, Karachi and Bangalore, were included in the Economist Intelligence Unit’s survey.
The survey compares over 400 individual prices across 160 goods and services in 133 cities around the world. These goods and services include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs. The survey results are primarily used by human resources managers to calculate compensation packages for overseas postings.

The survey has taken prices of 2016 to rank the cities.

In 2016, consumer prices in Nepal had shot up by double-digit in the first half of the year, largely because of the four-and-a-half-month Indian blockade, which affected cross-border movement of cargo vehicles and completely halted imports of essential goods, including food, petroleum products and raw materials, crippling the country’s supply system.

In January 2016, for instance, inflation stood at 12.1 percent. In that month, difference between inflation in Nepal and India also widened to 6.4 percent. This was not a good sign for Nepal, which imports over 60 percent of goods from India.

Situation started improving after the blockade was lifted in the first week of February 2016. But the progress was slow, and inflation hovered around 10 percent till July.

The situation was quite the opposite in other Indian and South Asian cities, where low wages drove down household spending and created many tiers of pricing. This, combined with a strong competition from a range of retail sources, cheap and plentiful supply of goods into cities from rural producers, and government subsidies on some products, kept prices down, says the report.

Because of these factors, the best value for money has traditionally come from South Asian cities, particularly those located in India and Pakistan, albeit some of the cities are less liveable “because of well-documented economic, political, security and infrastructural challenges”, adds the report.

While Asia is home to some of the cheapest cities, it also hosts some of the world’s most expensive cities.

Singapore, for instance, is the most expensive city in the world, followed by Hong Kong. Asia now accounts for half of the 10 most expensive cities, including Tokyo, Osaka and Seoul.

[contributed by Naresh Dhakal]

  Kathmandu, Nepal, South Asia