This city is now the world’s most expensive

Sun and sand… and a rising cost of living.

Tel Aviv, Israel, was ranked the most expensive city in the world, according to this year’s Worldwide Cost of Living report released by the Economist Intelligence Unit on Wednesday.

The Mediterranean metropolis rose to the top spot from fifth place last year, beating out Paris and Singapore, which were tied for second place. The top American city on the list, New York, came in sixth, ahead of Hong Kong and Zurich. Los Angeles was the only other American city in the top 10, coming in at number nine, ahead of Osaka, Japan.

Part of the reason for Tel Aviv’s rise to the top was the strength of its currency, the shekel, when translated into dollars, the report said. Prices there in shekel terms increased around 1.6 percent, led by groceries, household goods, cars and fuel. The city was the second most expensive place to buy alcohol.

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While the report doesn’t include property prices, it noted that they have also risen in Tel Aviv, especially in residential areas. That’s a major drain on locals’ wallets, according to Oren Kessler, a political analyst and author who moved to Tel Aviv from Washington D.C. two years ago.

“Prices here are similar if not more expensive than in Washington, yet the salaries don’t compare,” he said in a phone interview, noting that the price of a renovated apartment in the capital was similar to that of an older place in Tel Aviv. “Most Israelis at one point or another want to spend time here. It’s a magnet in that sense.”

Overall, this year’s inflation rate across cities was the fastest recorded in the past five years at 3.5 percent. That number was pushed up by the rising price of transport, as well as by the cost of recreation, tobacco and personal care. In 2020, inflation increased 1.9 percent, while it was up 2.8 percent in 2019, according to the report.

Although gas prices in the U.S. have spiked in recent months, no U.S. city made the world’s top 10 most expensive cities for gas. That list was led by Hong Kong, where it cost around $9.25 a gallon, followed by Amsterdam, where it was just over $8 per gallon. The average price of a liter of gas, equal to just over a quarter of a gallon, was up by 21 percent across the cities measured.

The index looked at the price of goods and services in 173 countries around the world.

“Over the coming year, we expect to see the cost of living rise further in many cities as wages increase in many sectors,” said Upasana Dutt, head of worldwide cost of living at the Economist Intelligence Unit, in a press release. “However, we are also expecting central banks to raise interest rates, cautiously, to stem inflation. So the price increases should start to moderate from this year’s level.”

Just over 130 miles away from Tel Aviv, Damascus was ranked the world’s cheapest city. Prices there have fallen as the country’s war-torn economy has struggled, according to the report. Tripoli, Tashkent, Tunis and Almaty, Kazakhstan rounded out the world’s top five cheapest cities.