Malaysia's capital has dropped six spots and is now ranked as the 163rd most expensive location for expatriates in the world, according to ECA International in its latest Cost of Living research.
ECA regional director for Asia Lee Quane said petrol prices in Kuala Lumpur had seen a significant increase of 49 per cent over the past 12 months.
"However, this was offset by lower costs for housing in areas popular amongst expatriate staff, which caused overall inflation rates in Malaysia to come in lower than many other locations.
"Coupled with the weaker Malaysian ringgit against other major currencies, the relatively low rates of inflation caused the city's rankings to drop," said Quane.
Many of Malaysia's neighboring countries in the region also slipped in the rankings over the past 12 months. In Thailand, a mix of currency weakness and relatively low rates of overall inflation have contributed to the decline of its cities in the global rankings, with Bangkok falling 13 places to 47th spot. Similar trends were seen in other locations in Southeast Asia.
"While Laos and Myanmar experienced high rates of inflation - almost 10 per cent - in the past 12 months, they still fell in our rankings as their currencies have weakened considerably.
"Laos was struggling with both lower exports to China, and the affordability of its rising foreign debt. In the case of Myanmar, currency weakness was due to the economic paralysis which followed the coup in 2021," noted Quane.
Elsewhere in the region, Singapore's position in ECA's cost of living rankings remained unchanged from last year in spite of the city experiencing significant price rises in the past year with housing rental costs, utilities and petrol prices seeing particular growth.
Meanwhile, Quane said Hong Kong remained as the most expensive city worldwide, even though prices had risen less in the special administrative region compared to other similar locations worldwide.
"Year-on-year price increases of three per cent, as measured by our basket of goods and services, are higher than what we typically see in Hong Kong. However, the hike in prices is lower than the rates in similar cities both within the region and globally.
"Rather, it has been the strength of the Hong Kong dollar, which is pegged to the US dollar, in the past year which enabled the city to maintain its position as the most expensive location worldwide as other currencies have weakened," added Quane.
