London in Top 10 List of World’s Most Expensive Cities

People enjoy the hot weather with a view of the city of London skyline from Potters Fields Park in London, England, on July 7, 2023. Lucy North/PA Wire

London has entered the top 10 list of most expensive cities to live in, according to a financial services industry ranking.

The British capital is now ranked 8th, just behind New York City, in Mercer’s 2024 cost-of-living city index published on Monday, jumping nine places from last year.

Hong Kong and Singapore retained the top and second spots from last year respectively, followed by four Swiss cities: Zurich, Geneva, Basel, and Bern. New York City is in seventh place, then London, Nassau in the Bahamas, and Los Angeles in the United States.

Mercer, a business of Marsh McLennan, compiles the data to help multinational businesses plan compensation packagers for employees working overseas and said the increase was due to factors including rental prices and general cost-of-living expenses.

The firm said inflation trends and rising housing costs has had a “significant impact” on multinationals, not only putting a strain on compensation packages for staff being relocated to big cities abroad, but making it difficult for firms to attract and retain staff.

High Living Costs

“The cost-of-living crisis has already had a significant impact on the mobile talent employed by multinational organizations,” Mercer said in its report.

It continued: “High living costs have required some assignees to adjust their lifestyles and cut back on discretionary spending. Some employees have even struggled to meet their basic needs.”

Earlier this year, the Office of National Statistics reported that the lettings market has experienced a significant increase in the average cost of rent in the 12 months to February, increasing by 9 percent and representing the highest annual percentage change since 2015.

London prices were the highest in England, at 10.6 percent.

Price Movements

In their study, Mercer measured some prices of everyday items including groceries. In London, a dozen eggs costs 3.6 percent more in March 2024 than it did 12 months before, while olive oil was up 48.3 percent and a woman’s haircut had jumped 7.2 percent.

According to the Institute for Government, cost pressures have been apparent since the middle of 2021, and was driven by factors including the impact of the COVID-19 pandemic, supply chain problems, depleted gas supplies in Europe, and semiconductor shortages in Asia.

The Russian invasion of Ukraine, a major exporter of food products, was also a main contributor to rising prices in 2022.

Official figures from May 2024 showed that inflation had fallen to its lowest rate in three years, to 2.3 percent. When Rishi Sunak became prime minister in October 2022, the inflation rate stood at 11.1 percent.