Mercer’s 25th annual Cost of Living survey finds the most and least expensive cities for expatriates in India

June 26, 2019

India, Mumbai

• Mumbai (67) retains its position in the top 20 most expensive cities in Asia for expatriates.  & as India’s most expensive city, followed by New Delhi (118) and Chennai (154).
• Kolkata (189) is the least expensive for expatriates, among cities surveyed in India
• 8 Asian cities rank in the global top 10 most expensive locations surveyed for expatriates.

Mumbai, India, 26 June 2019 - Mercer, a global consulting leader in advancing health, wealth and careers, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), announced the results of its 2019 Cost of Living survey today, with Mumbai to retain its position as the most expensive city in India, while Kolkata the least expensive. A number of factors, including currency fluctuations, cost of inflation for goods and services, and volatility in accommodation prices, contribute to the overall cost of expatriate packages for employees on international assignments.

Mercer’s annual Cost of Living Survey has become the primary reference point for many multinational organizations when calculating appropriate compensation packages for employees on international assignments.

“In a skill-focused economy driven by digital disruption and the need for a globally connected workforce, deploying expatriate employees is an increasingly important aspect of a competitive business strategy for global companies,” said Ilya Bonic, President of Mercer’s Career business. “There are numerous personal and organizational advantages for sending employees overseas, including career development, global experience, new skillsets, and re-allocation of resources. By offering fair and competitive compensation packages, organizations can facilitate moves that drive business results.”

Key Indian Findings

Mumbai (67), dropping twelve spots, continues to be India’s most expensive city and among the top 20 most expensive cities surveyed in Asia for expatriates. Prices of surveyed basket of goods in the city however have shown much stability with a relatively slower rate of inflation. Costs of items such as eating out & utilities show decline, however residential housing costs remain among the most expensive in the world, contributing to its top rankings in Asia & globally.

It is followed by New Delhi (118) and Chennai (154), while Bengaluru (179) and Kolkata (189) are the least expensive Indian cities ranked.  New Delhi (118), dropping most by fifteen spots, is placed in the middle of the pack, hence affected more by movement of neighboring cities in the list but with marginal decline in utilities & transportation prices. Chennai (154), dropping ten places, remains an attractive destination with relative affordability in eating out & leisure activities, clothing and expatriate residential housing prices.   

Bengaluru (179), dropping nine spots, and in the bottom two cities, shows mostly stable price movements despite few categories like transportation beginning to reflect strain on costs. Kolkata (189), with relatively cheapest expatriate accommodation prices & decline in prices of food away from home, maintains its position as least expensive for expatriates among cities surveyed in India.

In India, overall rankings have been impacted by the relative movement of the neighboring cities in the list. “A relatively slower price increase in surveyed Indian cities & major currencies weakening against the US dollar has pushed our Indian cities down in the ranking,” explained Padma Ramanathan, India Global Mobility Practice Leader at Mercer.

Across continents, Indian multinationals have been driving key talent mobilization into countries like USA (especially in the Hi-Tech sector), UAE, UK, Kenya & closer home in Bangladesh. Cities’ in the United States climbed in the ranking, among major US cities, Washington, DC (42) is up fourteen places, San Francisco (16) is up twelve spots. Boston (49) is up twenty-one spots, Houston (59) is up twenty-seven spots and Atlanta (69) is up twenty-six spots. Dhaka (47) in Bangladesh has moved up nineteen spots. This has a direct impact on the cost of expatriate assignments. A weakening home currency combined with a slower rate of home prices fluctuation, would lead to an increase in cost of living index differentials, requiring companies to account for higher cost-of-living allowances in compensating assignees.

“Globally companies are looking at emerging megacities as a business & talent imperative to maintain competitive advantage in future. Using mobility programs is one way to implement workforce strategies. For example, it is expected that the Asian continent will play host to most of the emerging megacities & rising cost of living rankings in the region indicate a need to continuously monitor the costs of doing business and revisit workforce strategies on a more frequent basis. Building flexibility into the mobility packages & policies is a growing trend to manage costs and a diverse workforce”, she added.

Global ranking

Mercer’s 2019 Cost of Living Survey finds that eight out of the top ten of the world’s most expensive cities for expatriates are Asian cities, resulting from high costs for expatriate consumer goods and a dynamic housing market. Tokyo (2), Singapore (3) and Seoul (4) top the list, while the costliest city in the world for the second consecutive year is Hong Kong (1). Other cities appearing in the top ten are Zurich (5), Shanghai (6), Ashgabat (7), Beijing (8), New York City (9), and Shenzhen (10). The world’s least expensive cities for expatriates are Tunis (209), Tashkent (208), and Karachi (207).

Elsewhere in Asia, Bangkok (40) jumped twelve places from last year. Hanoi (112) and Jakarta (105) also rose in the ranking, up twenty-five and twelve spots, respectively. Bishkek (206) and Tashkent (208) remain the region’s least expensive cities for expatriates.

Mercer's widely recognized survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York City is used as the base city for all comparisons, and currency movements are measured against the US dollar. The survey includes over 500 cities throughout the world; this year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed.

For more information on city rankings, visit https://mobilityexchange.mercer.com/Insights/cost-of-living-rankings.

Notes for editors

The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2019. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living Survey have been used as base measurements.

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on demand for data.

Mercer also provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies; compensation practices; and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility conferences and other events provide companies with the latest trends and research on mobility issues. Visit https://mobilityexchange.mercer.com/ for details. Follow Mercer’s mobility news on Twitter @Mercer.

Source: Mercer’s 2019 Cost of Living Survey