Dubai falls on world's expensive cities' list

Dubai and Abu Dhabi have fallen on the list of the world's most expensive cities, despite soaring inflation in the UAE, according to research by consultant Mercer.

Dubai ranks as the 52nd most expensive city in the world, while the UAE capital is at number 62.

"Dubai and Abu Dhabi have dropped significantly this year," the report said. "This is mainly due to the UAE dirham being pegged to the US dollar."

Tel Aviv is again the most expensive city in the Middle East. It ranked 14th on the global list, up three places from 2007.

"Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the euro and many other currencies, has caused significant changes in this year's rankings," said Yvonne Traber, a principal and research manager at Mercer. The survey of 143 cities compares the cost of 200 items, including housing, transport, food, clothing, household goods and entertainment.

Moscow is the world's priciest city for expatriate workers and is almost one-and-a-half times as expensive as New York, Shanghai, Amsterdam and Madrid.

Tokyo rose above London into second place in the world rankings while Oslo, boosted by Norway's petrodollars, climbed six places to fourth.

Asuncion was ranked the world's least expensive major city for a sixth year running.

Moscow had a cost of living index of 142.4 points compared to highest-placed US city New York, which fell seven places to 22nd with a score of 100.

Although consumers globally were feeling the pinch from rising price inflation, large currency shifts and economic differences meant some countries felt it more than others. "Our research confirms the global trend in price increases for certain foodstuffs and petrol, though the rise is not consistent in all locations," said Traber.

Mercer said currency trends accounted for many of this year's shifts in city rankings.