According to the 2024 Cost of Living City Ranking by the labor analysis firm Mercer, Mexico City (CDMX) has the second-highest cost of living in Latin America, only behind Nassau, the capital of the Bahamas.
Globally, Mexico City ranks 33rd among the most expensive cities in the world, and second place when the study is limited to Latin America.
According to the firm, the capital was ranked 79th last year, making its new position in the ranking indicative of a significant increase in the cost of living over the past year.
Monterrey, in Nuevo León, is the other Mexican city included in the ranking, although the Sultana del Norte is placed at a distant 115th globally and 10th in Latin America.
Inflation, Relocation, and Nearshoring
Mercer's ranking is considered one of the primary guides in economic terms and is mainly used by multinational companies to plan new investment destinations.
Experts attribute the increase in the cost of living in CDMX to the appreciation of the peso against the dollar, inflation, and even the relocation of workers due to nearshoring.
"The affordability of goods and services for international assignees shows the impact of the price increases in Mexico, as well as the logistical details and import effects," explains Amalia Suaste, Mobility Leader at Mercer Mexico. "Organizations are constantly monitoring the global situation to make assertive business decisions, including the future operation of international assignments."
Switzerland Dominates the Ranking of Expensive Cities
Although Hong Kong is the most expensive city in the world and Singapore ranks second, according to Mercer's analysis, three Swiss cities are among the top five most costly globally: Geneva, Basel, and Zurich.
The company explains that this may be due to the high quality of life offered by Swiss cities, the hyper-stable currency, and the country's overall tranquility.
"High living costs may require workers to adjust their lifestyle, reduce discretionary spending, and even struggle to meet basic needs. To compensate for these challenges, employers may offer compensation packages that include subsidies or housing allowances," argues Yvone Traber, Global Mobility Leader at Mercer.
In the Latin American context, the top 5 most expensive cities in the region, led by Nassau in the Bahamas and Mexico City, are rounded out by San José in Costa Rica, Montevideo in Uruguay, and São Paulo in Brazil