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UBS study: "Prices and Earnings"

UBS study: "Prices and Earnings"

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Published by BRR_DAG
A comparison of purchasing power around the globe, 2010 update

According to a UBS study, Oslo, Zurich and Geneva are the world’s most expensive cities once again this year, followed by Tokyo, Copenhagen and New York. The lowest prices for a broad basket of goods and services can be found in Mumbai, Manila and Bucharest.
A comparison of purchasing power around the globe, 2010 update

According to a UBS study, Oslo, Zurich and Geneva are the world’s most expensive cities once again this year, followed by Tokyo, Copenhagen and New York. The lowest prices for a broad basket of goods and services can be found in Mumbai, Manila and Bucharest.

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Published by: BRR_DAG on Sep 16, 2010
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Price levels
Oslo, Zurich and Geneva are the most expensive cities
Wage levels
 Highest salaries in Switzerland, Denmark and Norway 
Domestic purchasing power
 Zurich, Sydney and Miami with highest purchasing power 
 A global purchasing power comparison
Wealth Management Research Update edition 2009
August 2010
Prices and Earnings
2Prices and Earnings
Update August 2010
3Prices and Earnings
Update August 2010
Prices and Earnings
A global purchasing power comparison
August 2010 update
Amsterdam (Netherlands)Athens (Greece)Auckland (New Zealand)
Bangkok (Thailand)Barcelona (Spain)Beijing (China)Berlin (Germany)Bogotá (Columbia)Bratislava (Slovakia)Brussels (Belgium)Budapest (Hungary)Buenos Aires (Argentina)Bucarest (Romania)
Cairo (Egypt)Caracas (Venezuela)Chicago (United States)Copenhagen (Denmark)
Delhi (India)Doha (Qatar)Dubai (United Arab Emirates)Dublin (Ireland)
Frankurt (Germany)
Geneva (Switzerland)
Helsinki (Finland)Hong Kong (China)
Istanbul (Turkey)
Cities (countries)J
Jakarta (Indonesia)Johannesburg (South Arica)
Kiev (Ukraine)Kuala Lumpur (Malaysia)
Lima (Peru)Lisbon (Portugal)Ljubljana (Slovenia)London (Great Britain)Los Angeles (United States)Luxembourg (Luxembourg)Lyon (France)
Madrid (Spain)Milan (Italy)Manama (Bahrain)Manila (Philippines)Mexico City (Mexico)Miami (United States)Montreal (Canada)Moscow (Russia)Mumbai (India)Munich (Germany)
Nairobi (Kenya)New York (United States)Nicosia (Cyprus)
Oslo (Norway)
Paris (France)Prague (Czech Republic)
Riga (Latvia)Rio de Janeiro (Brazil)Rome (Italy)
Santiago de Chile (Chile)Sao Paulo (Brazil)Shanghai (China)Seoul (South Korea)Singapore (Singapore)Soa (Bulgaria)Stockholm (Sweden)Sydney (Australia)
Taipei (Taiwan)Tallinn (Estonia)Tel Aviv (Israel)Tokyo (Japan)Toronto (Canada)
Vienna (Austria)Vilnius (Lithuania)
Warsaw (Poland)
Zurich (Switzerland)Our publication “Prices and Earn-ings 2009 – A global purchasingpower comparison” appeared justover a year ago. Because o the highlevel o interest shown and requentinquiries received, we decided topublish an update this year o ourprevious price and wage comparisono 73 o the world‘s cities. This ap-pears to make sense, particularlyconsidering the changes seen in thecurrency markets and infation rates.The Colombian peso (COP), or ex-ample, gained around 35% versusthe euro (EUR), and the Swiss ranc(CHF) gained considerably versus theeuro last year. Exchange rates havea direct eect on individual cities’relative price and wage levels, butso do infation rates. Venezuela, orexample, has recorded an infationrate o over 40% since our 2009survey, while other countries, likethe Netherlands and Japan, shownearly no change versus the previ-ous year.Thereore, we have updated the keyindices (prices, wages and purchas-ing power) without collecting dataor a new survey o the individualcities, which is scheduled or thespring o 2012.
For the 2009 edition, a standardized survey o prices and wages in73 cities around the world was conducted by a number o independentprice surveyors. The questionnaire used or the survey covered 122 di-erent goods and services, and included 112 questions pertaining towages, payroll deductions and working hours or 15 dierent occupa-tions. Over 30,000 data units fowed into the survey evaluation. Sinceour basket o goods contains only a limited selection o goods and serv-ices, we adjusted the individual components based on their weightingin the European consumer price index. The weightings o the individualitems in the basket were designed so that all the prices added up tothe approximate monthly consumption o a European amily o three.To determine city specic wage levels a weighted average across the15 proessions’ salaries was calculated. The weights used or this calcu-lation was set to be as representative as possible or the average o allcities covered in the report. However, specic weights in some citiesmay still dier rom the ones applied here.In terms o interpreting the results, please bear in mind that all priceinormation gathered had to be converted into a reerence currency,making such data subject to fuctuating exchange rates. For this up-date, the price and wage data gathered in early 2009 were adjusted orcumulative infation (or the period March 2009 – June 2010) and trans-lated into euros, the reerence currency, at current exchange rates. Theaverage exchange rate or the period June-July 2010 was used (see listo exchange rates used on page 7), to minimize the eects o sharpday-to-day volatility. In addition to exchange rates and infation, theact that economic growth stems in part rom labor productivity en-hancements that are passed on to employees in the orm o real wageincreases (thus a real GDP growth weighting o 0.5 was actored intothe calculation) was also taken into consideration in computing thewage index.
4Prices and Earnings
Update August 2010
5Prices and Earnings
Update August 2010
Prices remain high in Oslo, Zurich and Geneva
Oslo, Zurich and Geneva are still among the most expensivecities that we surveyed. Factoring in rents, New York, Oslo andGeneva remain the cities with the highest cost o living.Auckland and Sydney climbed nearly 20 places in the rankingsowing to the dramatic appreciation o the New Zealand (NZD)and Australian dollar (AUD), respectively, versus the US dollar(32% / 30%) to join the top third o the world‘s most expen-sive cities.Other currencies to appreciate considerably versus the US dol-lar were the South Arican rand (ZAR; 31%), Indonesian rupiah(IDR; 29%) and Canadian dollar (CAD; 21%). Higher infationrates also caused Johannesburg, Jakarta, Montreal and Torontoto climb by around 20 places; Montreal and Toronto are nowamong the top 10 most expensive cities.
Price dierentials narrowing within Europe
The price dierential between western and eastern Europenarrowed rom roughly 35% at the start o 2009 to about26%, either including or excluding rent. The price dierentialbetween North and South America has been similar; the SouthAmerica basket now being approximately 23% cheaperexcluding rent, or 32% including rent, than North Americancities; although there has been little change in this price dier-ential since the rst quarter o 2009. Venezuela‘s decline in therankings (see below) was oset by São Paulo, Rio de Janeiroand Bogotá advancing on currency appreciation o 29% (Bra-zilian real, BRL) and 29% (Colombian peso, COP), respectively,versus the US dollar.
Major devaluation o Venezuelan currency
Caracas is still exhibiting major infation, resulting in the big-gest interim price change or any city surveyed at +40 percent.On the other hand the Venezuelan Bolivar devaluated by nearly50 percent versus the US dollar. This large devaluation causedCaracas to all by more than 30 places in the price ranking.
Price levels
Excl. rentNew York = 100Incl. rentNew York = 100
Oslo120.494.3Zurich114.189.1Geneva112.490.0Tokyo105.788.5Copenhagen103.678.2New York100.0100.0Stockholm97.173.1Toronto95.276.1Montreal92.071.9London91.375.5Singapore90.277.7Sydney89.974.4Helsinki89.970.8Paris89.173.1Vienna89.165.7Dubai88.081.2Los Angeles87.772.4Munich87.365.7Luxembourg87.067.0Istanbul86.868.9Frankurt85.966.8Sao Paulo84.865.5Dublin84.769.7Rome83.066.5Tel Aviv82.662.7Auckland82.165.3Chicago81.871.9Lyon81.459.3Brussels81.364.9Barcelona80.462.8Rio de Janeiro79.960.1Hong Kong79.774.1Miami78.168.5Madrid77.960.7Amsterdam77.760.3Berlin76.656.6Milan75.661.7Seoul75.360.9Athens71.953.9Nicosia70.554.9Lisbon70.054.7Bangkok67.347.0Taipei66.652.2Moscow65.859.6Johannesburg65.648.8Doha64.259.1Shanghai63.948.8Jakarta63.349.4Caracas62.552.6Ljubljana62.146.5Bogota61.347.4Warsaw61.146.4Manama59.448.7Budapest59.045.3Prague57.543.6Beijing57.242.4Riga56.940.1Kiev56.741.9Bratislava56.243.2Lima56.139.4Tallinn55.039.7Santiago de Chile54.840.5Vilnius53.139.1Mexico City53.040.1Buenos Aires51.437.8Soa50.637.9Cairo50.135.3Nairobi49.637.9Kuala Lumpur48.833.7Delhi45.734.0Bucharest45.435.2Manila41.630.4Mumbai37.530.3
The cost o a weighted shop-ping basket o goods gearedto western European con-sumer habits, containing 122goods and services.
Ranking relative to the index(price level excluding rent)
Switzerland and Denmark: Wages remain high
Those interested in high wages should still consider moving toZurich, Copenhagen or Geneva. Switzerland is still by ar theworld leader in terms o both net and gross wages. Strikingly,payroll deductions are relatively low in Switzerland. Grosswages in Copenhagen, or example, are as high as in Zurich,but net wages are roughly 30% lower.Sydney gained the most in the rankings, moving rom 20th to6th place, thanks to the strengthening o the Australian dollar(AUD) versus the US dollar, as mentioned above. Stockholm‘sranking was also boosted by a strengthening currency, risingrom 17th place in 2009 to 8th owing to a 12% rise in theSwedish krona (SEK). Ireland declined on infation o –2.2%and a contraction in gross domestic product (GDP) o roughly5%. These negative gures caused Dublin to slip nine places.
Highest GDP growth in China and Taiwan
The highest growth rates or gross domestic product were re-corded by China (10.7%) and Taiwan (9.1%). Despite currencyappreciation versus the US dollar (CNY 1%; TWD 7%), andpositive infation rates (China 1.6%; Taiwan 2.3%), there waslittle change in the rankings or Hong Kong (down one),Shanghai (down one), Beijing (up one) and Taipei (down two).
Wage levels
grossNew York = 100netNew York = 100
Zurich121.8126.0Copenhagen118.288.0Geneva117.3113.1Oslo102.191.5New York100.0100.0Sydney93.198.6Los Angeles90.991.9Stockholm82.478.6Munich82.272.3Luxembourg80.290.6Chicago80.178.8Miami79.281.9Toronto78.981.6Frankurt78.871.7Brussels78.671.6Montreal77.781.8Tokyo77.186.4Helsinki75.176.9Dublin74.687.5London73.378.0Amsterdam73.165.6Berlin70.867.6Vienna68.069.7Paris65.466.8Lyon64.567.3Milan60.057.3Nicosia53.866.1Auckland53.358.2Madrid52.159.5Barcelona51.958.2Rome47.544.8Athens43.844.9Tel Aviv43.750.0Lisbon42.145.9Ljubljana40.933.9Dubai39.754.9Seoul37.439.8Hong Kong34.943.9Johannesburg34.335.7Sao Paulo33.839.1Taipei33.340.0Moscow30.535.8Singapore30.035.0Rio de Janeiro29.731.4Istanbul26.727.7Manama25.533.8Prague24.426.4Tallinn23.826.2Warsaw23.723.5Bogota20.023.5Budapest19.717.0Bratislava19.621.7Vilnius19.118.4Doha18.125.0Riga17.918.7Lima17.118.8Kuala Lumpur16.519.2Santiago de Chile16.218.3Buenos Aires15.918.2Shanghai15.817.0Bucharest14.514.6Caracas13.416.8Beijing13.114.5Soa12.613.1Bangkok12.216.0Kiev11.513.0Cairo11.512.4Mexico City9.010.9Delhi8.610.3Nairobi8.28.9Jakarta7.89.5Manila6.77.8Mumbai6.37.6
Calculation is based onthe wage, social insurancecontribution and workinghours data or 15 occupationsworldwide to arrive at a netwage level ater taxes andpayroll deductions.To calculate the wage index,we looked at exchange ratesand infation, actoring in thatproductivity gains accountor a portion o economicgrowth, which are passed onto employees in the orm oreal wage increases (GDPgrowth weighted by a actoro 0.5).
Ranking relative to the indexon a gross basis

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