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. Last Updated: 07/27/2016

City Not Europe's Costliest Anymore




If the wages and savings of ordinary Muscovites have been eaten by inflation since the ruble collapsed in August, a new international cost-of-living survey released Friday shows that life has only gotten cheaper for foreigners and Russians who get paid in dollars.


Only a year ago, Moscow was rated the most expensive city in Europe for expatriates and the third most expensive in the world. Now it has fallen to 88th place.


Russia's second city, St. Petersburg, is way down in 115th place out of the 123 cities surveyed around the world and has the dubious honor of having the lowest cost of living of all Europe's major cities. Last year it ranked 32nd.


The Worldwide Cost of Living Survey, conducted in December by the London-based research group the Economist Intelligence Unit, showed that Japanese cities Tokyo and Osaka remain the most expensive in the world, while Hong Kong has moved into third.


The survey was conducted by comparing prices for products and services. The average prices were then compared to the average for New York, which was used as the base city with an index 100. Moscow's index in comparison was 69.


Tokyo, the most costly place on the globe, rated 138. Zurich, which leapfrogged Oslo to become Europe's most expensive location, measured 121.


A decline in housing prices appeared to be a major factor behind Moscow's lower cost of living.


For example, an average two-room apartment with Western renovation and located in the center costs $800 to $1,000 a month, while before the ruble devaluation the price was from $1,300 and $1,500, realtors said.


Viktoria Dovgach of Delight real estate company said, in general, apartment rents have dropped 30 percent since the financial crisis hit and many expatriates began packing their bags for home. Most landlords have been willing to reduce rents in order to keep their tenants.


"I managed to negotiate my apartment rent down to 40 percent of what it was before the crisis - that's a huge difference," said Gill Costello, an American from Boston who lives in Moscow.


While a lot of imported products doubled and tripled their price in rubles after August, some Russian-made products became considerably cheaper. A bottle of St. Petersburg-made Baltika beer, which cost 6 rubles (about $1) before the crisis, now sells at 8 rubles (35 cents). The price of a liter of milk, which was about 60 cents, dropped down to 25 cents after the devaluation.


Despite a small increase in gasoline prices, the rates for cab rides within Moscow remained the same if counted in rubles, and became one-third the price in dollar terms.


Many stores and restaurants frequented by expatriates, however, have returned to pricing in dollars, so these shoppers and diners are breaking even, provided of course that they are paid in dollars.


The expatriate life would have become even more attractive if the salaries of many foreigners and dollar-earning Russians had not been cut after the ruble collapse.


Albin Gielicz, an American from Chicago, who works as promotions manager at BBDO advertising agency, said the standard of living for expats has not increased as much as the figures might suggest because many people, including himself, have had to accept a salary cut.


"The phone bills are great now, the rent has fallen significantly, but a lot of products just stayed the same," he said in a telephone interview.


Nastia Furtasova, marketing coordinator of the Moscow office of Akin, Gump, Strauss, Hauer & Feld, a U.S. law firm, said her expenses have decreased.


"As the prices for basic food products and services have not grown as much as the dollar, many things, including international phone calls, laundry and utility payments, became cheaper for me," she said.


"I used to spend $500 a month in living expenses before the crisis, now I can make it with just $200," she said.


Zurich, in fourth place in the world rankings, was followed by Oslo, Paris, Libreville, the capital of Gabon, Geneva and London. Copenhagen and Vienna were tied for 10th place.


Athens and Lisbon are the cheapest cities in the European Union.


New York, the most expensive U.S. city, continues to climb in the ratings, from 19th last year to joint-14th. This is typical of the trend among U.S. cities because of the strong dollar. Atlanta remains the cheapest U.S. city, in 68th place.


Moscow is tied with Wellington, New Zealand, for 88th place, just above Bucharest.


At the very bottom of the list is the Libyan capital, Tripoli.