The most expensive cities in the world 2011(Image: Getty Images)

Luanda in Angola is officially the world's most expensive to live in, followed by Tokyo and N'Djamena in Chad, new research has found.

Despite its reputation for high prices, London is just 18th on the list, down one place on last year and the only UK city to feature in the top 100, despite the relatively high rate of inflation.

At the other end of the scale, Karachi in Pakistan is the cheapest city, where you can live for less than a third of the cost of Luanda.

The findings are part of the 2011 Mercer cost of living survey, which looks at 214 cities across five continents. It measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. New York is used as the base city and all cities are compared against it.

Warning on slow pace of recovery

Costs are rising in the UK
UK households have seen a sharp rise in the cost of living during the last year, thanks to sharp rises in rental accommodation and the cost of goods and services.

As a result, most UK cities have risen up the list of most expensive places to live. Aberdeen, the second most expensive, rose from 149th to 144th, while Glasgow jumped seven places to 148th and Birmingham from 158th to 150th overall.

Indeed, the fact London slipped one place on the list was a result of costs rising even faster elsewhere rather than any slowing of price rises in the capital, says Catherine Gervais, a global mobility expert at Mercer.

"Most UK cities have moved up the list following the loss in value of the US dollar against the British pound, the rise in cost of rental accommodation and increased prices on goods and services following the VAT increase," she said.

"Despite this, London has been overtaken and pushed down the list, reflecting even higher price increases in the cities ranking above it."

Belfast, ranked 178th, is the UK's least expensive city, according to Mercer.

Growth gap 'widening'

Other cities of interest
With seven cities each in the top 20, Europe and Asia are by far the most expensive continents. Remarkably, both Japan and Switzerland have three cities in the top 20 alone.

Elsewhere, Australian cities rose sharply up the charts due to the local currency gaining almost 14% against the US dollar. Sydney is the most expensive, rising from 24th to 14th, but Adelaide saw the most dramatic change, rising 44 places to 46th.

Conversely, many North American cities actually dropped down the list, says Nathalie Constantin-Métral, senior researcher at Mercer: "Increasing petrol prices continue to contribute to rising consumer prices, but price increases in other regions have been more severe, pushing US cities down the list."

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