Mumbai, Delhi, Chennai among most expensive cities for expatriates

While cities such as Melbourne and Buenos Aires have fallen in their rankings, Mumbai’s jump in ranking is also attributable to a continued surge in prices of food, alcohol and domestic supplies.  Inflation, amongst the highest in Indian cities surveyed, remained at 5.57 percent for the surveyed set of expatriate goods, during this period.

This is especially true for prices of expatriate food items such as, butter, meat, and poultry as well as premium farm produce which have increased significantly, along with prices of alcohol e.g. wine. Costs of sporting, leisure-related activities have also played a role in rising prices, followed in part by transportation costs, which includes taxi fares and cost of registration and road taxes. Real estate prices in Mumbai remain among the highest in the world for residential purposes.

New Delhi (103), however, has managed to claw its way out of the top 100 categories this year, with a drop in the rankings by four positions. Chennai (144) has dropped the most by nine spots, compared to other Indian cities. However, the rankings of cities are also impacted by the change in movement of other cities on the list. Similar to Mumbai, New Delhi shows a relative increase in the cost of living due to rise in prices of transportation and sports & leisure related category of services. In Chennai, prices of alcohol and clothing remain on the higher side, it says.

Bengaluru (170) has fallen in the cost of living rankings and driven significantly by the relative drop in prices on transportation, which includes taxi fares, cost of auto and auto parts as well as running costs. Kolkata (182) remains the least expensive among the surveyed Indian cities, though has moved up two spots, led in part due to increase in costs of domestic supplies and home services.

According to Mercer’s 24th annual Cost of Living Survey, factors like the instability of housing markets, low inflation and fluctuating prices for goods and services are impacting the cost of doing business in various cities around the world.

“According to Mercer’s International Policies and Practices Report on India, 93 percent of companies do compensate through a Cost of Living Allowance for their expatriate assignee. This increase in prices of goods in our cities, viewed along with currency exchange rate, has a direct impact on the Indian assignee compensation when using a balance sheet approach, making overseas assignment costs sometimes greater and sometimes smaller," said Padma Ramanathan, India Practice Leader, Global Mobility at Mercer.

"In this scenario, companies are reconsidering how frequently expatriate salaries are reviewed. In balancing assignee cost with assignee satisfaction, some companies prefer to let the assignee retain the benefit of a windfall if applicable."

Multinationals are embracing this transformation by focusing on mobile talent and assessing the cost of expatriate packages for their international assignees.