World’s most expensive country – Australia; cheapest – India

05/14/2013 by John Clinkard

According to the latest (March) inflation statistics released by Statistics Canada, the cost of a basket of goods purchased by an “average” Canadian household has risen by 1% over the past twelve months. Further, the Statistics Canada CPI report for March revealed that, on average, it cost the average household almost 5% more to live in Edmonton than in Toronto.

By design, this comparison of average living costs is quite theoretical and therefore difficult to conceptualize. Moreover, the difference in living costs in major urban centres across the country is relatively small.

In an effort to make it easier to compare prices around the world, Deutsche Bank (DB) recently published its second The Random Walk Mapping the World's Prices 2013.

DB bases this international comparison on a broadly based survey of goods and services obtained from the internet or other sources that have collated price data. Further, DB attempts to standardize prices in order to remove distortions caused by temporary discounts and seasonal variation.

Among developed countries, prices across a wide range of products were more expensive in Australia and Japan while the United States was, on balance, the most affordable. It should be noted, however, that the recent weakening in the value of the yen vis-à-vis most other currencies has narrowed the price gap between Japan and other countries.

In a similar vein, the softening in value of the UK pound and the Brazilian real has made Britain and Brazil more affordable compared to DB’s 2012 survey of global prices. According to DB, the least expensive country in the world is still India and while China continues to be cheaper than most other countries, the affordability gap is narrowing.

To provide an additional perspective on global prices, Deutsche Bank has calculated three “composite” price indexes, the Weekend Getaway Index, the Cheap Date Index and the Graduate Recruitment Index. Based on the Weekend Getaway Index, which compares the cost of a 2-night stay in a 5-star hotel, four meals, a two-day car rental and some smaller items in 24 major international cities, it costs a whopping US$2402.48 for a weekend holiday in Sydney Australia, almost three times more than the same getaway would cost in Toronto (US$859.53) and more than four times the cost in Mumbai (US$546) .

In addition to comparing living costs around the world, DB’s Global Survey of Prices collects and publishes office space rental costs and salaries offered to graduates at top business schools.

According to the Survey of Prices, although Sydney, Australia is relatively pricey compared to the rest of the world, it does not have the most expensive office space. As the chart illustrates, that honor is held by Hong Kong where the cost to rent space in a Class A building is significantly higher than elsewhere in the world.

With respect to salaries offered to graduates at top business schools, students from the INSEAD business school in Paris on average received a salary of US$123,000 in their first year of working compared to the US$122,000 earned by Harvard Grads and US$89,900 by graduates of the Richard Ivey School of Business in London, Ontario.

International comparison of the price of a Five Star Hotel Room vs Net Rental Cost of Class A Office Space*

International comparison of the price of a Five Star Hotel Room vs Net Rental Cost of Class A Office Space*
* Average rent quoted per square foot for a Class A building within the Central Business District without additional costs including taxes, service charges, etc.
Data Source: Deutsche Bank/Chart: Reed Construction Data, CanaData.