Tokyo tops world's most expensive cities

By CNN's Alex Frew McMillan

HONG KONG, China (CNN) -- Tokyo is the most-expensive city in the world, a new study finds.

And when it comes to burning a hole in your pocket, Asia is the place to go.

The continent claims seven of the 10 priciest places to live on the planet, according to consulting company William M. Mercer.

But Asia is also home to the second-cheapest spot -- the Indian city of Bangalore. Only Blantyre in Malawi is a better bargain of the 144 cities studied.

Mercer released its 2001 cost-of-living study this week.

Moscow up three spots to No. 2

Tokyo scored 134 to retain poll position for the 2001 index, making it four times as expensive as Blantyre, with a low of 29.

The survey scores cities on the cost of over 200 items, including food, clothing, housing, transport and entertainment.

Moscow (132) moved up three places to No. 2, with No. 3 Hong Kong (130) and No. 4 Beijing (124) standing pat from last year at the top of the list.

The Top 10 is rounded out by No. 5 Osaka, Japan (117), No. 6 Shanghai (114), No. 7 St. Petersburg, Russia (107), No. 8 New York (100), No. 9 Guangzhou, China (97) and No. 10 Seoul (95).

A narrowing gap

The gap between top and bottom has narrowed by 20 percent over last year, Mercer found.

"What we are seeing is a gradual reduction in cost-of-living extremes across the world," the project's senior researcher, Rehan Mustafa, noted in a release.

"This reflects the price reductions from wider availability of international products, particularly in the Third World," he added.

Despite Asia's expense, prices are coming down in countries like China. Expatriates still pay a premium for Western goods, but there are more chain stores springing up that sell them, Mercer found.

At the bottom, No. 144 Blantyre (29) comes at a noticeable discount, even to the other cities at the bottom of the list -- No. 143 Bangalore (41), No. 142 Quito, Ecuador (41), No. 141 Madras, India (42) and No. 140 Johannesburg, South Africa (43).