Researchers looked at 214 cities around the world, analyzing data from March 2011 to March 2012.
The Japanese capital topped a list of 214 cities ranked by the price of housing, transport, food and clothing. Cities are ordered on the joint cost of 200 items compared to the benchmark, New York, meaning currency fluctuations play a large role.
Two other Japanese cities rank in the top ten: Osaka comes in third with Nagoya in 10th place. Elsewhere, Luanda drops to second, Moscow is forth, with Geneva in fifth place.
The Dotonbori district in Osaka is known for its food and night life, but expatriates who live there may not want to shell out for the cost of entertainment. The city is ranked the third most expensive in the world.
Moscow is the fourth most expensive city in the world, according to Mercer. While many European locales dropped in the rankings as their currencies fell in value against the U.S. dollar, a few, including Moscow and Geneva (No. 5 on the list), held firm.
Geneva is the fifth costliest city, according to Mercer’s survey, while its neighbor to the north, Zurich, is No. 6, up one place from the 2011 rankings. The strength of the Swiss franc against the dollar also helped push Bern two spots higher to No. 14 on this year’s list.
Zurich, home to a number of banking giants such as UBS and Credit Suisse, moved one spot higher this year from 7th in 2011 and 9th in 2010.
Singapore is seventh in this list. Singapore, like other Asian financial centers, has seen a big inflow of expatriates, which has pushed up the cost of housing and other living costs.
The city has been moving up Mercer’s most expensive cities list, rising two spots this year from eighth in 2011 and 11 th in 2010.
N’Djamena is eighth on the list. N’Djamena, the capital and economic center of the central African country of Chad, fell five spots this year from third place in 2011 and 2010.
Hong Kong, the only Chinese city or territory to make the top 10 list, has been ranked the ninth most expensive place to live for the past two years, falling from the eighth spot in 2010. One of the most substantial increases in the cost of living in Hong Kong has been in renting property.
Nagoya moves into the top ten from eleventh position last year. The city is Japan’s fourth most populous urban area. Nagoya is Japan’s auto manufacturing hub, and an important place of business for some of the world’s leading carmakers like Toyota, Honda, General Motors and Volkswagen.
As a result of the on-going European financial crisis, many cities across Europe fell in the rankings. London dropped seven spots to 25th this year, while Paris moved down 10 spots to No. 37.
