In the Economist Intelligence Unit’s (EIU) Worldwide Cost of Living (WCOL) survey conducted in 2015, Singapore was ranked as the most expensive city for expatriates to live in for the third consecutive year. The WCOL survey is designed to allow HR managers and expatriates to compare the cost of living in 133 cities globally, and to enable the HR managers to work out appropriate compensation policies when relocating employees.

The survey findings do not reflect the cost of living of Singaporean households. Here’s why:

1. All prices are converted from local currencies to US dollars¹, which means that the rankings are sensitive to currency fluctuations.

From 2004 to 2014, the Singapore dollar appreciated by nearly 35% against the US dollar. This significantly increased the price of goods and services expressed in US dollar terms, thus contributing to the rise in Singapore's ranking in the EIU survey over this period. In 2015, when the Singapore dollar depreciated by 11% against the US dollar, the gap between Singapore and the next two cities in the ranking (Zurich and Hong Kong) narrowed.

While such currency fluctuations affect the rankings and cost of living of expatriates who earn their income in foreign currencies, they have less impact on Singaporeans who earn their income in the local currency.

2. The items in the EIU consumption basket are quite different from the goods and services regularly consumed by Singaporeans.

For example, the EIU’s consumption basket includes items like filet mignon and international foreign daily newspapers. Comparatively, the typical Singaporean consumption basket includes items such as local newspapers and chicken rice, which tend to be cheaper.

3. The prices of comparable items in the EIU survey are higher than what Singaporeans pay

For the comparable items in both the EIU and Singaporean consumption baskets², the prices of close to 95% of them were higher in the EIU survey than in the surveys conducted by the Department of Statistics (DOS)³. Indeed, for these items, about 40% had prices that were more than double what Singaporeans pay. Table 1 shows the prices of some of the comparable items collected by DOS and EIU.

Table 1: Prices of selected goods and services collected by DOS and EIU

No	Items	Prices collected by DOS (S$)	EIU WCOL Prices (S$)
		Average Retail Prices for 2015	Min	Max
1.	White rice, 5 kg	13.07	15.95*	22.75*
2.	Eggs, 10	2.22	3.33*	5.58*
3.	Men's haircut (tips included)		54.00	99.00
	-       Hair cut without shampoo	11.17
	-       Haircut with shampoo and blow dry	28.99
4.	Electricity, monthly bill for family of four4		815.00	1,225.74
	-       Overall	111.06
	-       HDB flats	99.92
	-      Non-HDB housing	166.05
5.	Men's business shirt, white	59.17	259.00	525.00

 Source: Singapore Department of Statistics, EIU Worldwide Cost of Living 2016

*Prices from the EIU WCOL survey have been scaled to match the units used by DOS

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