Bengaluru least expensive city for expats despite inflation spike: Mercer survey

For expatriates Mumbai is more expensive than cities like Seattle , Frankfurt and Berlin

Bengaluru is the most expensive in India when it came to cost of transportation, report says. Photo: Mint
Bengaluru is the most expensive in India when it came to cost of transportation, report says. Photo: Mint

Bengaluru: Bengaluru has registered the highest inflation among Indian cities, making it that much more costlier for expats to live in, according to Mercer’s 2016 Cost of Living Survey.

Thanks to increased costs of grocery, poultry and dairy products, alcohol and tobacco, domestic supplies, personal care and clothing and footwear, inflation in Bengaluru rose to 6.08%, for the year ended March 2016 compared to less than 5% in other cities, said Ruchika Pal, India practice leader, global mobility, Mercer.

Bengaluru also turned out to be the most expensive in India when it came to cost of transportation as the cost of fuel is the highest in the country, said Pal. Petrol costs about Rs.70 a litre in Bengaluru, similar to the price in Mumbai.

Despite these increases in cost, Bengaluru was the least expensive city in India and ranked 180th in the survey. Mumbai came in at the 82nd place and is India’s most expensive city, followed by New Delhi (130), Chennai (158) and Kolkata (194).

Mumbai for expatriates is more expensive than cities like Seattle (83), Frankfurt (88), Canberra (98), Berlin (100) and Istanbul (101).

Salaries of expats have also been impacted because of currency volatility.

A stronger dollar means that expats who came to live in India earned more. But it also means out-bound expatriates’ salary suffered. India has more people taking expat roles in other countries when compared to the number of expats working in India, said Pal.

The weakening of rupee to the dollar has impacted salaries of out-bound expatriates, said Pal. In the last year the rupee has weakened to Rs.68.23 from Rs.62.02 per dollar.

“Given that the purchasing power parity and cost of living has not changed, weakening of the rupee means lesser salary for those who are moving to other countries,” pointed out Pal. And their number is only set to increase further.

“With a large number of Indian multinational organisations progressively expanding their footprint abroad, 70% of them are expecting expatriate assignments to increase over the next two years to address business needs as well as build careers and leadership development,” said Pal.

Across continents, countries with the highest number of India assignees are the US, UK and United Arab Emirates (UAE). Across continents, countries with the highest expected increase in the number of Indian international assignees are the UAE, UK and Kenya.

This year, Hong Kong emerged as the most expensive city for expatriates both in Asia and globally. The world’s least expensive cities for expatriates are Windhoek in Namibia (209), Cape Town in South Africa (208), and Bishkek in Kyrgyzstan (207).

This year’s ranking includes 209 cities across five continents and it measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. New York City is used as the base city for all comparisons and currency movements are measured against the US dollar.

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