Why you should not take expat city price indexes too seriously

Share:

London Burough Market

If you are considering moving from one part of the world to another it’s very likely that you’ll be wondering about the differences in the cost of living between the two. Fortunately, there are various price surveys and indexes that attempt to sum up each city with a single number, so you could see that your next city might cost, say, 20% more than your current one.

However, these price indexes all have major weaknesses so they might be just as likely to be deceiving as helpful. For some weird reason, I’ve always been fascinated by the prices of things whereever I go, and I’ve been to most popular parts of the world by now, so I can see first-hand that it’s never simple enough for one number, or even a list of prices for each city.

Prices for most things are quite similar everywhere

Back before I visited supermarkets in cities all over the world I would wonder if there was a place where I could get, say, a can of Coke for US$0.10 instead of the US$0.75 it would cost me at home. You hear that the average wage in Brazil is US$5,000 a year (or whatever) and in Cambodia it’s US$1,000 a year (or whatever), so it seems natural to wonder if you could fill up a shopping cart for US$5 instead of US$30 like back at home. Well, it turns out you can’t.

It’s still a curious fact, but it’s true that name-brand items tend to cost close to the same around the world. You might find a locally-made cola for a bit less, but not much.

On the other hand, I would wonder if similar things in supermarkets in New York City or London or Tokyo would cost twice as much as in my cheaper suburban market, but in most cases they are similar as well. In fact, many groceries (like fruits and vegetables) are quite a bit cheaper in most of Europe than in the US, even though the costs of bringing them to market are higher.

There is usually a good alternative

So the reason that these city price indexes are usually hopeless is that they have to dig up prices for the same item in stores all over the world. Recently I read about one where it said a “loaf of sliced bread” costs something like US$8 in Tokyo and over US$5 in New York City. I’ve lived in NYC and I can tell you where to get a loaf of bread for US$2 today, and if bread is really that expensive in Japan it’s because so few people want it.

In Japan the equivalent of a sandwich would be a bento box or one of those rice ball things (with various fillings) and those are both cheap alternatives. So if you looked at the price index you might think that it would cost you US$12 to make yourself a ham sandwich at home (and that may be true), but instead of a ham sandwich you could get a bowl of pork and noodles for around US$6, or make it at home for half that price.

Another example that stands out to me is when I was living in Bangkok in 2010. I’d go to the cheapest supermarket in my neighborhood and I noticed that Italian pasta (made from semolina flour) cost around US$4 for half a kilo, which is about four times what it would cost in the US or Europe. Looking at that you might think eating spaghetti wasn’t worth it in Thailand, and that might actually be true, but right next to the pasta on the shelf were a dozen different kinds of rice noodles that cost perhaps US$0.50 for the same quantity.

In other words, if you can get used to rice noodles instead of wheat noodles (as most of us can) then it’s actually quite a bit cheaper in Thailand than in Europe. But if you read the price comparison for “Italian-style pasta” in both places you would think you might have to give up noodles altogether if you move there. In most cases, you won’t, but you will have to ask and look around for some things.

Local specialties are almost always cheap

At the top of this article I was saying that groceries cost similar prices all over the world, but that’s really only true of things made in factories. When you compare prices of things like grains, vegetables, fruits, and sometimes even meat, the prices can vary dramatically. Unsurprisingly, in “poor countries” these items tend to be extremely cheap.

You can get a 10Kg bag of white rice for only a few dollars in much of the world, and that’s enough to feed a family for months (if they only ate rice). And vegetables are often just as cheap in local outdoor markets. This is where the food costs are dictated mostly by the average wage in that area. Conversely, vegetables and especially meat are extremely expensive in some big cities that are far from the fields and farms.

The same is true in France where fresh baguettes are a huge part of the local diet, so they are available very cheap from markets and bakeries on every block. The quality is extremely high for the price so when you are in France it’s wise to work baguettes into your routine.

The bottom line for the potential expat

If you are considering moving to a city in a different part of the world, don’t believe the surveys that say groceries cost double or half as much there. That might be true of just a few items, but for most things you’ll find local alternatives that are cheap and delicious. Only the pickiest of eaters would end up doubling their food bill between two major cities.

Unfortunately, one notable exception I’ve encountered is certain dairy products in Asia. Cheese and ice cream are very rare and almost never produced locally (almost all Asian adults are lactose intolerant), so you’ll have to pay the high price for importing them from far away. In the case of cheese it’s not too bad, but the cost of importing premium ice cream is really expensive, so that is one thing you might end up cutting out of your diet, maybe for the best anyway.

Comments

Tags: , , ,

No comments yet.

Leave a Reply