Though rents went down, grocery bills shrank and companies trimmed their workforce after the devastating 2011 earthquake and tsunami, Tokyo edged past Angolan capital Luanda to become the world's most expensive city for expatriates in Mercer's 2012 survey.
Japan’s future demographic crisis has been highlighted by a municipal government report citing that the population of the capital city of Tokyo will be cut by half over the next 90 years.
The annual cost-of-living report, released Tuesday by the U.S. consulting firm, showed that several Japanese cities such as Osaka and Nagoya had moved up in rankings as the yen strengthened against the U.S. dollar.
Researchers assessed 214 cities across five continents, analyzing data from March 2011 to March 2012. Cities were ranked by the price of housing, transport, food, entertainment and clothing and ordered on the joint cost of 200 items compared to the benchmark, New York, which came in at No. 33.
According to Mercer, you can buy two cups of coffee in New York for the price of one in Tokyo -- $8.29. The cost of a film in Tokyo is equally dear at an average of roughly $23 per ticket.
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Japan has not been a cheap place to live for a long time, and Tokyo has topped the most expensive city list 12 times since 1994. Even when it hasn't been in the top slot, Tokyo has remained in the top three every year except 2007, when it dropped slightly to fourth.
Second place Luanda, where more than half the population of 5 million lives in poverty, exemplifies the list's focus on the cost of living for expatriates.
Unsurprisingly, several European cities took a dive this year, a result of the ongoing financial crisis. London dropped seven spots to 25, while Paris tumbled 10 spots to 42.
"Countries badly hit by the eurozone crisis, including Greece, Italy and Spain, have also experienced drops," Nathalie Constantin-Métral said in the report.
Italian cities like Milan (38) and Rome (42) similarly tumbled down the rankings.
On the flip side, Australian and Asian cities rose as their currencies strengthened. Shanghai, for example, ranked well above London, New York and Paris.
"In Asia, more than six in 10 cities moved up in the rankings, including all surveyed cities in Australia, China, Japan and New Zealand," Constantin-Métral said. "Cities in Australia and New Zealand witnessed some of the biggest jumps, as their currencies strengthened significantly against the U.S. dollar."
Expatriates in New Zealand experienced a considerable rise in cost of living in the prior 12 months with both Auckland and Wellington jumping over 60 places on the list.
Several U.S. cities moved up in rankings this year too, but many remain surprisingly low: Winston Salem, in North Carolina, had the lowest cost of living of any major urban area in the U.S., according to Mercer. Chicago (110) and Washington, D.C.. (107) were also relative bargains. São Paulo and Rio de Janeiro in Brazil were the highest in the Americas at 12 and 13 on the list.
At the bottom of the list, Karachi was the cheapest place to live at less than a third the cost of Tokyo.
Press "Start" to take a look at the top 10 most expensive places to live, according to Mercer.