The republic beat Paris, Oslo, Zurich and Sydney, while Tokyo moved down to sixth position from first previously after the yen slid, the EIU's latest Worldwide Cost of Living Survey released today showed. The biannual report compares the price of products and services such as food, clothing, transport, private schools and domestic help between 131 cities using New York as a base.
Singapore, smaller in size than New York City, has seen home prices surge to records in recent years amid rising wealth and an influx of foreigners. The expansion of the island's private banking industry and the presence of regional hubs for global companies have drawn more top talent, and senior executives in Singapore are earning more than those in Hong Kong, according to human resources consultant Towers Watson & Co.
"Singapore's rise is partially attributable to the continued strength of the Singapore dollar, but the city has seen price rises too which have no doubt been compounded by a reliance on imports,” Jon Copestake, editor of EIU report, said in a statement.
The Singapore dollar has gained more than 35% over the past decade. Annual inflation has averaged 2.8% in the past 10 years, compared with 1% in the previous decade, according to data compiled by Bloomberg. The Southeast Asian nation was ranked the fifth-most expensive location for expatriates out of 214 cities in Mercer LLC's 2013 Cost of Living Rankings.
The city’s transport costs are almost three times higher than New York and it is the most expensive place to buy clothes globally as retailers import luxury European brands, the EIU said.
Car buyers in Singapore must pay for excise and registration duties that more than double the vehicle’s market value. They must also bid for a limited number of permits that are auctioned by the government, a tool it uses to control pollution and congestion.
"Compared to other countries, car prices are at an astronomical level," said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. "The labour market is tight and moving forward, we think inflation will be much more of a concern over the next two years."
Singapore’s unemployment rate held at 1.8% in the three months through December, matching a five-year low reached in the last quarter of 2012, as the government persists with a clampdown on cheap foreign labor that has raised business costs. The central bank said last month the pass-through of domestic costs to prices of consumer services could intensify as firms face rising cost pressures from higher wages.