Price hikes notwithstanding, Jeddah remains one of the cheapest cities to live in, according to an economic research group. Jeddah is among the 10 cities with the lowest cost of living, the Economist Intelligence Unit (EIU) said, out of the 140 cities included in its “Worldwide Cost of Living 2011” report released last month. The EIU used New York as the base city with index set at 100 points. The in-house research unit of the Economist analyzes the point-of-sale prices of 160 products and services for the biennial report, which is published in June and December. Karachi is the cheapest city “with a cost of living level at less than one-half of that of New York and one-third of that of Tokyo,” the report said. Joining Karachi, Manila and Dhaka in the list of cheapest cities were Panama City, Algiers, Jeddah, New Delhi, Tehran; Mumbai, and Tunis. Meanwhile, Tokyo was found to be the most expensive city to live in (161 points), followed by Oslo, Norway; Osaka and Kobe, Japan; Paris, France; Zurich, Switzerland; Sydney and Melbourne in Australia; Frankfurt, Germany; Geneva, Switzerland; and Singapore. “There are two major reasons why a city's cost-of-living index will change over time: exchange rate movement and price movement,” the EIU said. “Since a common currency is required in making a comparative calculation, all local prices are converted into US dollars, which emphasizes the role of currency movement. If, for example, a currency strengthens or inflation pushes up the price of goods, the relative cost of living in that country will also rise,” the research group explained. The EIU gave a 25 percent weight to the category shopping basket, 19.5 percent to transport, 18 percent to recreation and entertainment, and 13 percent to clothing. The remaining percentage was divided among beverages, household supplies, personal care, tobacco, utilities and domestic help.
