(Reuters) — Singapore has leapfrogged rival regional financial centre Hong Kong for the first time as one of the most expensive places for expatriates to live in Asia, according to a new survey.
The survey by consultancy ECA International showed Singapore is now the sixth most costliest city in Asia for expats, up two notches from one year ago.
Hong Kong, in contrast, fell to ninth from sixth and now ranks behind Beijing and Shanghai in terms of cost.
Tokyo was once again the most expensive Asian city for expatriates, followed by Nagoya, Yokohama, Kobe and Seoul.
"While such increases are unlikely to deter companies from relocating staff to Singapore, it does mean that costs of sending staff to Singapore will rise," ECA regional director Lee Quane said in a statement. "This may erode some of the cost advantages that Singapore previously had over other destinations in the region in terms of the cost of relocating an employee.”
Asia has struggled for much of this year with stubbornly high inflation, which has been exacerbated in many countries by higher food and fuel costs and surging housing prices. Though price pressures are slowly easing amid the global economic slowdown, inflation is expected to remain elevated in some parts of the region for at least a few more months.
Singapore's consumer price index rose 5.4 per cent in October from one year ago, and the government expects inflation for the whole year to come in around five per cent.
Hong Kong's annual inflation rate was 5.8 per cent in October, unchanged from September and slightly higher than August.
In July this year, human resources consultancy Mercer, which also produces a widely followed cost of living survey, ranked Singapore as the most expensive city in Asia outside of Japan.
Earlier this week, the city-state's dominant taxi operator ComfortDelGro raised its fares and extended the hours when surcharges will apply, in a move stockbroker DMG said will likely raise fares by an average of 10 per cent.
Singapore, one of Asia's key business and financial centres, is a regional base for many multinational companies and private banks. It is also the main Asian centre for trading in energy and commodities.
Chow Penn Nee, an economist at United Overseas Bank, said that while costs have become a major concern, Singapore retains several advantages over Hong Kong and other Asian cities such as the wide use of English in everyday life.
"Cost is definitely a factor, with corporations saying that costs of living and rents are going up. But by and large Singapore has certain strengths over Hong Kong such as the environment, language skills and educational levels," she said.
Inflation in Singapore is expected to ease next year while the local dollar has recently weakened against the U.S. dollar, she added.
The ECA survey, which is conducted annually, uses a basket of day-to-day goods and services and excludes items such as accommodation, utilities, cars and school fees which are usually provided separately by employers.