MercoPress. South Atlantic News Agency

Strong peso makes Chile the most expensive in South America

Chile became in 2005 the most expensive country South American country to live in, followed by Brazil and Uruguay, while the cheapest are Bolivia and Paraguay, according to a report released this week by the Brazilian Geography and Statistics Institute, IBGE.

Comparing purchasing power parity, the level of prices in Chile is 17.7% higher that the average in South America, (100), followed by Brazil 14.2%; Uruguay, 8% and Venezuela 1%.

Below the average figure with similar rates, Peru, 85.8%; Ecuador and Colombia 85.3% shows the IBGE report. Argentina figures with 77.5% followed by Paraguay, 57.4% and Bolivia 53.8%.

However regarding per capita expenditure in goods and services, Argentina, Chile and Uruguay topped the list in 2005. Argentina figures with 61.3% above average; Chile, 48%; Uruguay 43% and Venezuela 8%. Below the 100 points average come Peru, 91.6%; Brazil, 90.5%; Ecuador 88.5% and Colombia 84.1%. The countries with the lowest per capita expenditure in 2005 were Paraguay 69.8% and Bolivia 52.7%.

The IBGE report is the first of several to be released later in the year by the South American International Comparison Program 2005, a joint effort of all the region's Statistics and Census Departments.

A recent report on world cities' cost of living from Mercer Human Resources Consulting showed that Santiago last year became the third most expensive city in South America, behind Sao Paulo and Rio do Janeiro from Brazil.

Furthermore the world rating, which has Moscow, Seoul and Tokyo top of the list 1,2 and 3, also indicated that in 2005 Santiago advanced 37 places from 128 to 91 with Sao Paulo and Rio do Janeiro figuring in positions 34 and 40. In 2004 they rated 119 and 124 but a 20% appreciation of the Real against the US dollar and domestic inflation were responsible for the leap.

Luis Fernando Higuera, Mercer's Country Manager in Chile said that the advance of Santiago in the list can be attributed not only to inflation (3.7% in 2004) but "mainly to the very strong appreciation of the Chilean peso against the US dollar". "Since all our comparative costs are in US dollars when we convert domestic prices in Chilean pesos to the greenback, the outcome is far higher than mere annual inflation", said Mr. Higuera

The Mercer World cost of living survey which includes 144 cities worldwide and contemplates 200 goods and services (housing, transport, food, clothing, leisure, house equipment, etc.) takes New York with 100 points as the reference city.

In the latest edition, 2005, London figures as the second most expensive city in Europe in position 5 and (110.6 points) and New York in position 10.

Asuncion in Paraguay remains the least expensive city globally, in 144th position with a score of 43.5, with Buenos Aires, Montevideo and Caracas in 142nd place (score 54.8.), 138th (56.5) and 136th (57.2) respectively.