London is the second most expensive city in the world to live in after Moscow, according to an annual survey. It has climbed three places since 2006. Asunción, the capital city of Paraguay, is the cheapest.

London has overtaken Seoul and Tokyo to command the second position in the latest Cost of Living Survey from Mercer Human Resource Consulting.

Mercer’s survey looks across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. Harare has been excluded from this year’s ranking because the severe economic crisis in Zimbabwe has rendered costs there incomparable.

“There have been some significant changes in the ranking since last year. These are primarily due to exchange rate fluctuations – in particular, the weakening of the US Dollar and strengthening of the Euro,” said Rebecca Powers, a principal and senior consultant at Mercer.

Steep property rental costs, combined with the strengthening of the pound compared to the dollar have contributed to London’s rise in the ranking.

Most expensive cities in the World

1. Moscow (second year in a row)

2. London (4th)

3. Seoul

4. Tokyo

5. Hong Kong

6. Copenhagen

7. Geneva

8. Osaka

9. Zurich

10. Oslo