Tel Aviv, Israel, is now the most expensive city in the world to live in, according to a biannual report by the Economist Intelligence Unit.
The Israeli city topped the EIU’s December 2021 worldwide cost of living index for the first time ever, climbing up from fifth place last year.
The EIU said that Tel Aviv rose up the rankings mainly because the Israeli currency, the shekel, had soared, “buoyed against the dollar by Israel’s successful Covid-19 vaccine rollout.”
Israel had one of the fastest Covid-19 vaccination programs in the world. According to figures from Our World in Data, 62% of Israel’s population were fully-vaccinated as of Monday. In early November, the Israeli shekel was up 4% against the U.S. dollar year-to-date, according to Reuters, but has since trimmed those gains.
Around a tenth of goods rose in cost in Tel Aviv, in the EIU’s latest research, which looked at the prices of over 200 products and services in 173 cities.
More broadly, the EIU said that the inflation rate of the prices it tracked had risen by 3.5% year-on-year in local currency terms to September 2021, up from just 1.9% in 2020. It said this represented the fastest pace of inflation in its index over the past five years.
Supply chain issues, fluctuations in currency exchange rates and changes in consumer demand led to this rise in prices for commodities and other goods, the EIU said. Transport saw the biggest rise in cost, with the price of gasoline per liter up by 21% on average in 2021, according to the research.
Upasana Dutt, head of worldwide cost of living at the EIU, said that prices were expected to rise further across many cities over the coming year, as pay increased.
“However, we are also expecting central banks to raise interest rates, cautiously, to stem inflation,” she said, adding that these price increases should, therefore, start to moderate from the current levels.
The French capital of Paris fell down to second place in the rankings, followed by Singapore. Rome, Italy, saw the biggest fall in the rankings, thanks to a sharp decline in the cost of groceries and clothing.