MercoPress. South Atlantic News Agency

Sao Paulo and Rio do Janeiro among the 12 most expensive cities in the world

New York was the highest placed US city in 32nd place

Brazil’s two biggest cities are getting more and more costly and are more expensive places to live in than New York, according to the annual cost of living study released Tuesday by business consulting firm Mercer.

Sao Paulo was rated the 10th most expensive city in the world to live in and Rio do Janeiro was ranked 12th. That’s a big jump from last year, when Sao Paulo was 21st and Rio was 29th.

New York was the highest placed US city in 32nd place, ahead of Los Angeles (77th) and Chicago (108th).

The top five most expensive cities for ex-pats are: Luanda, Angola (1); Tokyo, Japan (2); N’Djamena, Chad (3); Moscow, Russia (4); Geneva, Switzerland (5).

According to the Mercer website, “The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It ... is designed to help multinational companies and governments determine compensation allowances for their expatriate employees.”

The African cities are expensive because so much is imported.

Expats living in Brazil, meanwhile, have suffered because the local currency has strengthened against the US dollar, making imported goods costly.

“Local currencies in Brazil, Chile and Costa Rica have all strengthened significantly against the US dollar, causing the region’s cities to rise in the ranking,” said Nathalie Constantin-Métral, the senior researcher at Mercer responsible for compiling the annual ranking.

Investment dollars are flooding into Brazil’s booming oil industry and to help it with the infrastructure necessary to host the 2014 World Cup and 2016 Olympics.

High taxes and absurd profit margins have also made even the most ordinary goods and services prohibitively expensive. A bus trip costs 2 US dollars. A loaf of wholemeal bread costs a minimum 4 USD. And a 3G iPhone that sells for 49 USD in New York goes for the equivalent of 598 USD in Sao Paulo.

The Brazilian government is aware of the problem and has taken measures – mostly through the financial markets – to try to stop the real’s rapid valuation. But the measures are considered timid, and anyway they come as the dollar weakens against many of the world’s currencies.

Another factor is the booming commodities market. Brazil is one of the world’s biggest exporters of grains, beef, soy beans, iron ore, sugar, coffee, and tobacco and that income has helped bolster the country’s once shaky economy. The country’s economy grew 7.5% last year and has been on a concerted surge since the middle of the last decade.

The rapid rise in property prices – they have more than doubled in Rio over the last three years and are rising sharply in Sao Paulo – has prompted the first talk of a bubble and a credit crisis. But Brazilian officials have dismissed that talk as scaremongering.