If you think a coffee in London is expensive, don't move to Moscow - or Tokyo, for that matter. The Russian capital tops the list of the world's most expensive locations for the third year running and London has lost its second spot.

Expatriates looking for the cheapest place to live may want to consider Asunción, in Paraguay, the least expensive of the 143 cities covered by Mercer, the consultancy, in a survey measuring the comparative costs of more than 200 items ranging from housing to entertainment, using New York as its base city on 100 points.

Moscow scored 142.4, up from 134.4 last year, made more expensive as the rouble appreciated against the dollar and accommodation costs rose. London had an index of 125 compared with 126.3 in 2007, with sterling relatively stable against the dollar.

The survey found that one cup of coffee including service would cost on average £2.20 in London, compared with £5.19 in Moscow and £2.57 in Tokyo.

Similarly, a copy of an international daily newspaper would set you back £3.05 in Moscow compared with just £1.50 in Britain.

Tokyo was the most expensive city to rent a luxury two-bedroom unfurnished apartment, costing £2,613 a month, compared with £2,500 in London. However, that was more expensive than both Moscow's and New York's £2,293.

Overall, London dropped one place in the rankings and Birmingham and Glasgow also lost ground, overtaken by European cities made relatively more expensive by a strengthening euro and other European currencies.Oslo jumped six places to fourth in the rankings because of a stronger Norwegian krone and record property prices.

The weakening of the dollar against most leading currencies has made living in US cities relatively cheaper, with New York the only North American city to feature in this year's top 50, down seven places to 22nd.

A weaker dollar, combined with higher costs of living due to economic growth, has also pushed Eastern European cities such as Riga, in Latvia, and Indian cities such as Delhi up the rankings as they become relatively more expensive compared with the United States.

Hey, big spender

Most expensive cities (Mar 2008)

1 Moscow (1)*

2 Tokyo (3)

3 London (2)

4 Oslo (10)

5 Seoul (3)

6 Hong Kong (5)

7 Copenhagen (6)

8 Geneva (7)

9 Zurich (9)

10 Milan (11)

Source: Mercer
*Last year's ranking in brackets

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