The main focus of this blog is to highlight countries experiencing the most volatile cost-of-living conditions, so that global mobility teams are quickly alerted to potential challenges when trying to maintain their expatriates' spending power while on international assignment. It just so happens that one of ECA's most important surveys, our interim cost-of-living survey, does much the same thing in finer detail and has just been published.
We survey cost-of-living conditions in more than 500 locations around the world every six months, in March and September. But there are always a few countries where exchange rates and/or inflation are so volatile that they need even closer monitoring. To keep on top of these fast-changing factors, we also do interim surveys in June and December for these places.
Our June 2024 interim survey has just been published, covering 12 countries, many of which regularly appear in this blog. Below, interspersed between our usual exchange-rate tables for the month of July, are brief notes for each of the surveyed countries, bringing you up to date with the latest cost-of-living situations.
Angola
Due to heavy dependence on imports and spiking food prices, inflation in Angola, which joined the list of high inflation countries in March 2024, has remained moderately high. Prices have risen by 4% in the last three months, and the Angolan kwanza has remained relatively stable, depreciating by 2% against the euro. The effect of the inflation outweighs the small currency movements and so assignees to Angola will see their indices increase slightly.
Argentina
Inflation in Buenos Aires has slowed slightly from March to June, but remains very high, with prices increasing by 18% in Buenos Aires. During this same period, the Argentine peso depreciated by 6% against the euro and 7% against the US dollar. The high inflation easily outweighs the smaller currency movements and so assignees will see their indices increase.
Egypt
Although the devaluation by the Central Bank of Egypt in March caused the Egyptian pound to depreciate severely, it has since appreciated by 6% against the euro. The implementation of an agreement with the IMF, including allowing the Egyptian pound to float in return for an expanded loan package, has enabled the economy to stabilise and inflation in Cairo has slowed to 5% in the three months to June. With the effects of the strengthening Egyptian pound combining with persistent inflation, assignees in Egypt will see their indices rise.
Iran
Inflation has gradually slowed in the three months to June with prices in Tehran increasing moderately by 5%. The open-market exchange rate of the Iranian rial, which ECA uses to calculate cost of living indices, appreciated slightly by 1% against the euro. This is despite the news in May that Iran devalued their official exchange rate by 89%. Indices will rise for assignees moving into the country due to the combination of the small currency appreciation and inflation.
Countries experiencing largest currency losses in July
| Country |
Currency |
Movement v EUR
1 - 29 Jul 2024 (%) |
Inflation
(%) |
| Angola |
AOA |
-4 |
31.0 |
| New Zealand |
NZD |
-5 |
3.3 |
| Nigeria |
NGN |
-5 |
34.2 |
| Norway |
NOK |
-5 |
2.6 |
| Tanzania |
TZS |
-4 |
3.1 |
| Zambia |
ZMW |
-4 |
15.4 |
Laos
Inflation has eased slightly in Laos with prices increasing by 3% between March and June. In the last three months, the Lao kip has continued to slide, falling 3% against the euro. Index movements will be dependent on the strength of the assignee’s home currency as the effects of the currency devaluation and rising prices largely offset one another.
Malawi
Inflation in Malawi, fuelled by steeply increasing food prices related to a severe drought, has remained stubbornly high between March and June. Prices jumped by nearly 8% in the three months to June. Over the same period, the Malawian kwacha depreciated by 2% against the euro. As the currency has remained relatively stable compared to inflation, assignees to Malawi will see their indices rise.
Nigeria
The effects of the huge two-step devaluation of the Nigerian naira in December 2023 and January 2024 continue to be felt as inflation in the country has remained high, with prices increasing by 10% in the three months to June in Lagos. Following the devaluation of the naira, the currency has been allowed to float freely. Its value has been very volatile since its flotation but overall between March and June the naira has strengthened by 9% against the euro. The effect of the high inflation, combined with the strengthening Nigerian naira, will result in significant increases to the indices of assignees in Nigeria.
Sierra Leone
Inflation in Freetown remains high but has slowed in the three months to June, reaching 3%. The Sierra Leonean leone has stabilised, appreciating by 1% against the euro. With the leone stable, inflation dominates the index calculations and therefore most assignees in Sierra Leone will see their indices rise.
Countries experiencing largest currency gains in July
| Country |
Currency |
Movement v EUR
1 - 29 Jul 2024 (%) |
Inflation
(%) |
| Japan |
JPY |
+3 |
2.8 |
| Myanmar |
MMK |
+14 |
n/a |
| Surinam |
SRD |
+5 |
16.2 |
South Sudan
South Sudan continues to experience severe economic instability. Food insecurity has been exacerbated by climate change, and political turmoil has continued, both as a result of failed negotiations between the country's two main political coalitions and spillover from the civil war in neighbouring Sudan. Damage to South Sudan’s main oil pipeline caused by the conflict in Sudan has severely impacted the country’s ability to sell its principal export and is a significant reason behind the deteriorating economic situation and soaring inflation. Prices in Juba have increased by 55% in the three months to June. Depreciation has slowed but the South Sudanese pound remains weak, depreciating by 4% against the euro in the same period. Assignees in the country will see their indices rise significantly, since inflation is severe enough to offset the depreciation.
Turkey
In an effort to reduce inflation and shore up the value of the Turkish lira, the central bank raised interest rates to 50% in late March and that level has been maintained since. These measures appear to be working, with inflation falling a little to 8% in the three months to June. Over the same period, the Turkish lira fell by 3% against the euro. Although inflation has fallen, it remains high and outweighs the effects of the currency movement in the index calculations. Therefore, assignees to Turkey will see their indices rise moderately.
Venezuela
Inflation has continued to drastically slow in Caracas, dropping to a historically-low 1% in the three months from March. Official reports show inflation at a 12-year low as the government increased local dollar sales ahead of the July elections. The usually-volatile Venezuelan bolivar has remained surprisingly stable, gaining 0.2% against the euro and depreciating 0.9% against the US dollar. Due to the relatively low inflation and stability of the currency, assignees will likely see minor changes in their indices, depending on their home location.
Zambia
The Zambian kwacha has continued to depreciate, dropping 10% against the euro between March and June. Prices in Lusaka increased by 5% in the same period. Assignees in Zambia will likely see their indices fall, as the currency’s depreciation outweighs inflation.
Finally, here is this month's selected currency movements table:
Selected currency movements (v EUR)
| Country |
Currency code |
% movement to 29 July 2024 v EUR since: |
Latest official annual inflation (%) |
| |
|
1/7/24
(1 month) |
29/4/24
(3 months) |
29/1/24
(6 months) |
31/7/23
(12 months) |
|
| Argentina |
ARS |
-3 |
-8 |
-12 |
-70 |
271.5 |
| Australia |
AUD |
-3 |
-1 |
-1 |
0 |
3.6 |
| Brazil |
BRL |
-3 |
-10 |
-13 |
-16 |
4.2 |
| Canada |
CAD |
-2 |
-3 |
-3 |
-3 |
2.9 |
| Chile |
CLP |
-1 |
-1 |
-4 |
-12 |
4.2 |
| China |
CNY |
-1 |
-1 |
-2 |
0 |
0.3 |
| Egypt |
EGP |
-2 |
-2 |
-36 |
-35 |
28.2 |
| India |
INR |
-2 |
-2 |
-1 |
0 |
4.7 |
| Indonesia |
IDR |
-1 |
-2 |
-3 |
-7 |
2.7 |
| Japan |
JPY |
+3 |
+1 |
-4 |
-8 |
2.9 |
| Kenya |
KES |
-3 |
+2 |
+20 |
+9 |
5.7 |
| Korea Republic |
KRW |
-2 |
-2 |
-4 |
-7 |
2.4 |
| Mexico |
MXN |
-2 |
-9 |
-7 |
-8 |
5.0 |
| Nigeria |
NGN |
-5 |
-20 |
-44 |
-52 |
36.6 |
| Norway |
NOK |
-5 |
-1 |
-6 |
-7 |
2.6 |
| Philippines |
PHP |
-1 |
-3 |
-4 |
-5 |
3.7 |
| Poland |
PLN |
+1 |
+1 |
+2 |
+3 |
2.6 |
| Russia |
RUB |
-1 |
+6 |
+5 |
+7 |
8.6 |
| Singapore |
SGD |
0 |
0 |
0 |
0 |
3.1 |
| South Africa |
ZAR |
-1 |
+2 |
+3 |
-2 |
5.2 |
| Sweden |
SEK |
-3 |
0 |
-4 |
-1 |
2.6 |
| Switzerland |
CHF |
0 |
+2 |
-2 |
0 |
1.3 |
| Turkey |
TRY |
-2 |
-3 |
-9 |
-18 |
71.6 |
| United Kingdom |
GBP |
0 |
+2 |
+1 |
+2 |
2.0 |
| United States of America |
USD |
-1 |
-1 |
0 |
+1 |
3.0 |
| Venezuela |
VES |
-2 |
-2 |
-1 |
-18 |
51.4 |