Hard to swallow: A glass of beer costs twice as much in Sydney as it does in London. Photo: Simon O'Dwyer
Australians are talking about the rising cost of living. In spite of inflation running under 3 per cent, this is no longer a moderately priced country.
When we think of expensive cities, we think of London, Paris and New York. But Sydney ranked ninth on this year’s Mercer global cost-of-living rankings, a long way above these other cities.
The 2011 Economist Intelligence Unit said Sydney was 45 per cent more expensive to live in than New York, and 28 per cent more expensive than London.
How does this break down? The EA International recruitment organisation produced a survey in 2012 which sought to compare life in Sydney, New York and London. It concluded that retail, utilities and food were "significantly" less expensive in New York and London, and that public transport was not only cheaper in those two cities, but also of a much higher quality.
There are some items where we have parity with New York and London: a cappuccino that costs $3.69 in Sydney would cost $3.92 in London and $3.75 in New York. But items such as Levi’s jeans, a summer dress, a pair of Nike shoes and a paperback novel cost twice as much in Sydney as they do in New York. And beer costs twice as much in Sydney as it does in London.
A worrying aspect of the Australian cost of living is that the rises are so noticeable in food and energy. The OECD says Australia’s food prices increased 41.3 per cent from 2000 to 2012, while Britain’s food prices rose 32.9 per cent and the United States’, 28.4 per cent.
In the EA survey, a 1 litre carton of fresh milk cost 22 per cent more in Sydney than in London and 24 per cent more than in New York. Sydney’s loaf of white bread was 53 per cent more expensive than in London and 27 per cent more expensive than in New York. Potatoes in Sydney were 33 per cent more expensive than they were in London and 43 per cent more costly than in New York.
As for energy, the average monthly utility bill in Sydney was almost twice what it was in New York. Not surprising since our household cost of electricity rose 110 per cent in the past five years and is expected to rise by another 7 per cent by 2015. Household prices for gas increased 54 per cent in the 10 years to June 2013.
In 2004, Sydney rose from 47th to 20th in the Mercer expensive cities rankings. Sydney is now in the top 10 and Melbourne and Perth are in the top 20.
But there’s a different way to do this: for instance, ask yourself if there’s another country you’d rather live in? The OECD has ranked Australia top of its Best Life Index for the fourth year in a row: we rank highly for civic engagement, environment, health and safety.
Yes, we’re expensive. But sometimes value is more important than price.
Mark Bouris is executive chairman of wealth management company Yellow Brick Road. ybr.com.au