A report featured on the BBC this week revealed that the Economist Intelligence Unit (EIU) has recognised Karachi as the cheapest city in the world. It was awarded the same title last year by the EIU during its annual survey on the worldwide cost of living.
The survey took into account the cost of living in 133 cities worldwide using New York City as the base. A basket of more than 160 goods and services was compared, including utilities, clothing and food prices.
The low cost of living in Karachi could be attributed to the decrease in the inflation rate in Pakistan’s largest city over the past year.
In January 2015, the year-on-year inflation rate in Karachi had dropped to 4.5%, comprising 1.2% food inflation and 7.1% non-food inflation.The State Bank of Pakistan (SBP) Inflation Monitor showed that the year-on-year inflation rate in Karachi was 7.6% in January 2014 and consisted of 10.6% food inflation and 5.4% non-food inflation.
SBP Governor Ashraf Mahmood Wathra had described the fall in inflation as broad-based and was quoted saying:
“The deceleration in [food inflation]is mainly the result of better supply conditions while [non-food inflation] is explained by a combination of factors, including plummeting international oil price as well as decline in other global commodity prices; lagged impact of earlier conservative monetary policy stance and moderating aggregate demand; and stable exchange rate,” he added.
Bangalore, Caracas, Mumbai and Chennai are also among the five cheapest cities on the EIU list.
The five most expensive cities in the world remained unchanged this year, with Singapore topping the list. It was followed by Paris, Oslo, Zurich and Sydney