By Benjamin Cunningham
staff writerLiving expenses have spiked in Prague this year, with a turbulent world economy and strong crown to blame, experts say.
While such a jump may come as little surprise to most residents, the extent of the increase is nonetheless significant. Prague’s ranking went up 20 places on Mercer Human Resource Consulting’s annual survey of the world’s most expensive cities for émigrés — from 49th on the list in 2007 to 29th this year. Although the study expressly looked at expat life, its findings are yet another indication of rising expenses for anyone living in the capital.“It is mainly about currencies and inflation,” said Mercer’s Petr Boldiš. “This is a unique combination compared with recent years.”The crown is up about 15 percent versus the euro, and 25 percent against the U.S. dollar over the past 12 months, according to statistics from The Economist. The increase is a major contributor to the relative cost jump in Prague in comparison with other European and U.S. cities.“This has been a particularly strenuous year,” said Weston Stacey, executive director for the American Chamber of Commerce in the Czech Republic. “Some of this is temporary. The exchange rate won’t last in this extreme for a long period of time.”The Mercer rankings — meant to assist businesses in adjusting salaries for expatriate workers — fluctuate themselves. Prague showed a similar jump on the list between 2004 and 2005, rising from 49th to 21st place, with currency exchange rates again playing the key role.Stacey did point to some longer-term explanations for Prague’s bump this year, namely increased real estate prices. He also cited the worldwide surge in energy and food costs. A weak U.S. dollar continues to affect American companies in the Czech Republic, as some employers increasingly consider paying wages in euros. “Companies are constantly adjusting, so these are some additional things to take into account,” Stacey added. Mercer’s 2008 survey ranked 143 cities, and Moscow had the highest cost of living for the third straight year. New York City is the measuring stick in the survey with a base rating of 100 on Mercer’s index. The declining dollar helped push seven European cities into the top 10. New York was the only U.S. city in the top 50, ranking 22nd. Paraguay’s capital, Asuncion, was the cheapest city on the list, ranked at 143. The survey also noted an increasing gap between expensive and cheap cities. A mixed basket of consumer items is used when calculating each city’s rating, with prices for transportation, food, leisure activities and clothing carrying the most statistical weight. Luxury items like alcohol and tobacco, meals outside the home and domestic services are also taken into account. Teams survey the cities checking on prices with an emphasis on the expat lifestyle. “It is not meant for locals,” said Boldiš, who helps oversee the survey in the Czech Republic and Slovakia.Expats in Bratislava caught a break this year, ranking 45nd on the list, down from 31st last year. “There is a developing Western economy. Some of the luxury goods may not be as good as in Prague, but groceries are cheaper,” Boldiš said. Moscow’s cost of living continues to rise and far outpaces even the second-ranked city, Tokyo. “There is a high demand for luxury goods in Moscow and Russia generally,” Boldiš said. “It is a center of consumption.” Benjamin Cunningham can be reached at bcunningham@praguepost.com
(Prague Post)
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