The decision to relocate abroad or in some other city is big. Each year, hundreds and thousands of people do so for their own set of reasons. While choosing a new home, one of the most important factors that is considered is the cost of living in the new place. This WealthHow article will give you an insight into some of the cheapest places to live in the world.
According to The Economist Intelligence Unit, the cheapest city in the world is Karachi, Pakistan, while the most expensive one is Tokyo, Japan.
Rising prices of household commodities, land, food products, luxury amenities, and ongoing recession in the market have led people all over the globe to find cheap, or at least affordable havens for themselves. The interpretation of the word ‘cheap’ is different in different countries, as the definition depends largely on the standard of living, which is not the same everywhere; in fact there are huge discrepancies. No doubt that globalization has led to a considerable growth in the standard of living everywhere in the world. Nevertheless, there are so many places, which might seem to be so inexpensive than the developed world’s economic hubs that they may actually look like different worlds in themselves. Yet, it should be noted that these places do come across as some of the cheapest, yet greatest places to reside in the world.
The Terms Explained …
Before we go on to explore which cities in the world are the cheapest of them all, let us understand some important economic concepts that help determine the overall cost of living.
Market basket is the fixed list of items that is used to determine trends in the rate of inflation in a particular market/economy.
A Consumer Price Index (CPI) is used to measure the fluctuations/changes in the prices of a given market basket of consumer goods and services, purchased particularly by households.
A Rent Index is used to measure the changes in housing rent in a particular geographic area over a given period of time.
Similarly, a Groceries Index is used as a measure to determine the fluctuations in the prices of groceries over a period of time, while a Restaurant Price Index pertains to the rise and/or fall in the expenses incurred on restaurants over a given span of time.
A Local Purchasing Power Index measures how the overall purchasing power of the people belonging to a given region/country has risen or fell over a period of time.
World’s Cheapest Places to Live
If you are planning to expatriate in the near future, and are looking for an affordable new home for yourself and your family, here are some of the cheapest cities to stay in the world.
* All statistics given in the article pertain to the year 2013.
Consumer Price Index: 54.07
Rent Index: 29.25
Groceries Index: 57.99
Restaurant Price Index: 46.14
Local Purchasing Power Index: 29.81
The national capital of Iran and its largest city and urban area, is also the largest city in the whole of Western Asia. With a population of approximately nine million, the city has been listed as the 10th cheapest city to live in the world. The city boasts of being Iran’s economic center, with about 30% of the country’s public sector and 45% of the private sector located there.
Affordability Quotient: On the affordability scale, Tehran ranks as a location having a reasonable cost of living. Although the household accommodation costs in the city are very high as compared to other international locations, a substantial amount of money can be saved on facilities such as healthcare, education, groceries, communication, and alcohol and tobacco. Moreover, Tehran is one of the most car-dependent cities in the world, however, public transport in the city is also cheap enough, owing to the fact that it is government subsidized.
Current Rate of Inflation: 44%
Jeddah, Saudi Arabia
Consumer Price Index: 115.04
Rent Index: 17.14
Groceries Index: 167.71
Restaurant Price Index: 34.84
Local Purchasing Power Index: 69.43
One of the most important cities of Saudi Arabia, second only to its capital and largest city Riyadh, Jeddah was initially an important port, owing to its vicinity to the Red Sea. Even today, the city is the second commercial center of the Middle East following Dubai, owing to its strategic location that places it within two hours flying distance from the capitals of major countries of the Middle East and North Africa. Jeddah also enjoys a position of being the fourth largest industrial city in Saudi Arabia, and thus, also boasts of having several employment opportunities.
Affordability Quotient: In comparison to the other places in the world, Jeddah boasts of being low in terms of the total cost of living. While the household accommodation costs are not as high as compared to some of the international locations, the other facilities such as transport, communication, education, groceries, and healthcare are also pretty cheap. Petrol prices in the country are also unbelievably low.
Current Rate of Inflation: 3.5%
Panama City, Panama
Consumer Price Index: 58.43
Rent Index: 36.31
Groceries Index: 64.77
Restaurant Price Index: 51.05
Local Purchasing Power Index: 49.87
This capital of the Republic of Panama is also its largest city, and is situated at the Pacific entrance of the Panama Canal. The major administrative and political center of the country, it is also its main economic and financial center. The city has a service-based economy with banking, commerce, and tourism being the major industries. As much as 55% of the total GDP of the Republic of Panama is generated in the city.
Affordability Quotient: Panama City also boasts of low cost of living, the major money-saving sectors being those of education, communication, groceries, healthcare, and transport. Accommodation costs are not very low in the city, but are pretty reasonable in comparison to other major cities of the world.
Current Rate of Inflation: 3.9%
Colombo, Sri Lanka
Consumer Price Index: 43.95
Rent Index: 12.47
Groceries Index: 55.73
Restaurant Price Index: 24.93
Local Purchasing Power Index: 30.63
The capital of Sri Lanka and its largest city, is also the administrative capital of the country’s Western Province. Known since historic times as an important port city, it is even today a major industrial center of Sri Lanka with a large majority of Sri Lankan corporations having their head offices there. Moreover, the Colombo Metropolitan (CM) area, with its large share in the country’s export-oriented market is not only the core area of the Sri Lankan economy, but is also regarded as one of the most prosperous regions in South Asia.
Affordability Quotient: As far as the overall cost of living is concerned, Colombo is an inexpensive city. The housing costs in the city are low by international standards. Similarly, the costs incurred on education, communication, clothing, groceries, etc. are also on the lower side. By Asian standards, the average costs of healthcare facilities, and personal care (spas, cosmetics, etc.) may seem very high. However, when compared on an international scale, they are pretty affordable. Transport costs in the city are high, especially owing to high fuel prices.
Current Rate of Inflation: 6.2%
Consumer Price Index: 54.73
Rent Index: 16.57
Groceries Index: 48.19
Restaurant Price Index: 44.06
Local Purchasing Power Index: 41.65
This largest Romanian city and also its capital, is the sixth largest city in the European Union by population within city limits. One of the main industrial centers of Romania and Eastern Europe, it is a prosperous city with a plethora of state-of-the-art facilities and infrastructure. The economy of the city centers around its industrial and service sectors, and it boasts of having the headquarters of as many as 186,000 firms, which also include those of nearly all the Romanian companies. Moreover, the public transport system of Bucharest is the largest in Romania and also ranks among the topmost ones in Europe.
Affordability Quotient: Bucharest boasts of having a really low cost of living. By international, and especially European standards, the city is cheap with regards to the costs of housing, healthcare, education, groceries, communication, personal care, and even recreation and entertainment. Owing to the fact that the city is a Romanian public transport hub, transport is also pretty cheap.
Current Rate of Inflation: 3.7%
Consumer Price Index: 41.27
Rent Index: 14.94
Groceries Index: 41.33
Restaurant Price Index: 29.63
Local Purchasing Power Index: 26.35
The capital and largest city of Algeria, Algiers is located on the west side of a bay of the Mediterranean Sea, and thus, also boasts of being an important seaport in North Africa. One of the most important economic and financial centers in the whole of North Africa, the city’s stock exchange is particularly important, with a capitalization of about 60 million euros.
Affordability Quotient: Algiers has the highest cost of living among all major cities of North Africa, however, by international standards, it ranks as one of the cheapest places to live. In comparison to other international locations, the housing costs in the city are pretty affordable, while those incurred on transport, healthcare, groceries, and education are low. Even the communication systems (mobile phones, Internet, etc.) are very cheap. However, the costs incurred on personal care are very high.
Current Rate of Inflation: 3.5%
Consumer Price Index: 32.51
Rent Index: 4.19
Groceries Index: 31.90
Restaurant Price Index: 23.01
Local Purchasing Power Index: 21.21
Kathmandu is the capital of Nepal, and also its largest urban agglomerate. With an economy that focuses mainly on tourism, the city is the main economic center of the country that was ranked third amongst the top ten on the rise in the world by TripAdvisor. Owing to the city’s location in a fertile ancient lake basin, it has had a self-sufficient economy since historic times, and today it has developed into an important industrial and commercial center of Nepal that houses various national and international organizations. Apart from tourism, the other important economic sectors in Kathmandu include manufacturing, education, agriculture, and transport.
Affordability Quotient: One of the most affordable locations to stay in Asia, Kathmandu boasts of an extremely low cost of living. While the local people of Nepal might tell you that the city is very expensive, when you compare it on the international scale, you will rather be surprised. Housing, groceries, transport, healthcare, communication, education cost really less by international standards, however, commodities such as alcohol and tobacco are a little pricey. It should be noted that owing to the recent political tensions in Nepal, Kathmandu also ranks as one of the most undesired places to expatriate.
Current Rate of Inflation: 4.98%
New Delhi, India
Consumer Price Index: 30.36
Rent Index: 9.04
Groceries Index: 29.90
Restaurant Price Index: 22.52
Local Purchasing Power Index: 61.22
The capital city of India and also the seat of the Indian Government, New Delhi is considered to be one of the most expensive cities in the country. The main employment-generating sectors in the city are those of government and quasi-government, however, the service sector that includes technology, telecommunications, hotels, banking, media, and tourism is also big, and generates a huge amount of money. A lot of multinational companies are located in the city, and it also has a huge network of public transport facilities.
Affordability Quotient: One of the most expensive Indian cities is also one of the cheapest in the world. By international standards, the city has quite affordable housing facilities. Other things such as clothing, communication, education, grocery, healthcare, transport, etc. are on the cheaper side. However, items such as alcohol and tobacco are very expensive, owing to the heavy taxes levied by the government on these commodities.
Current Rate of Inflation: 6.1%
Consumer Price Index: 32.31
Rent Index: 18.93
Groceries Index: 34.68
Restaurant Price Index: 23.61
Local Purchasing Power Index: 47.37
Formerly known as Bombay, Mumbai is the commercial and entertainment capital of India and the most populous city in the country. It is located on the west coast of India, and boasts of having a deep natural harbor, which is one of the major reasons why it is the major economic center of the country. The wealthiest city of India, Mumbai also ranks sixth among the top ten global cities on billionaire count. The city is home to several important financial corporations and also numerous corporate headquarters. The city also boasts of an amazing network of public transport.
Affordability Quotient: Housing costs are high in Mumbai in comparison to the other international locations, however, the outskirts are relatively cheaper. All other costs, including grocery, communication, education, healthcare, recreation, public transport, etc., are on the cheaper side. Personal care items such as cosmetics, toiletries, etc., are not very cheap, but are affordable. However, like Delhi, alcohol and tobacco are very pricey, owing to the high taxes levied on these items.
Current Rate of Inflation: 6.1%
Consumer Price Index: 29.24
Rent Index: 4.39
Groceries Index: 29.28
Restaurant Price Index: 22.16
Local Purchasing Power Index: 26.99
Located along the coastline of the Arabian Sea, Karachi is the largest and the most populous metropolitan city of Pakistan. The capital of Pakistan’s Sindh Province, it is the third largest city in the world by population within city limits, and also the largest city in the Muslim world. Karachi is very important to Pakistan from the economic perspective, in that it is a major seaport; the country’s center for banking, industry, and commerce; and also houses some of the largest corporate houses of Pakistan, alongside some multinational corporations. It is also worth noting that the manufacturing sector in Karachi is huge, and amounts to about 30% of that of the entire nation.
Affordability Quotient: The Economist’s Worldwide cost of living index 2013 has ranked Karachi as the cheapest city to stay in the world. Considered as one of the most expensive cities in Pakistan, the overall cost of living in Karachi is still enormously low on the international scale. While the housing expenses can be rated as average, all the other costs such as those incurred on groceries, healthcare, education, transport, and even on restaurants, hotels, and entertainment are very low in the city.
Current Rate of Inflation: 8.6%
Other Cheap Places to Consider
|Mexico City, Mexico
As mentioned above, some of these cities might be considered to be expensive in the respective countries or even geographic areas in which they may fall. However, it is always advisable to calculate the overall cost of living in these cities by the international standards. Also, if you are considering expatriation, it is very essential to consider your and your family’s safety as well. Check for the crime rate in the city you are planning to migrate, so that you can live a hassle-free life. On a closing note, some of these places might not offer you the kind of luxury that you may be getting in your own country. So, look carefully for all the necessary factors, and choose wisely!