For the first time on record, Zurich has swung to the unenviable title of the world’s most expensive city, jumping four places and knocking Tokyo off top spot, according to a new report from the Economist Intelligence Unit.

Currency swings propelled the Swiss city into top place, pushing Tokyo into second. Geneva was also affected by the sky-high Swiss franc, jumping six places into joint third with Osaka.

Both Japan and Switzerland have seen strong currency movements over the last few years which have made them relatively more expensive, said the EIU in its biannual Worldwide Cost Of Living Index.

Over the last year the Swiss franc has soared, as investors piled into the currency in search of a haven outside the troubled Eurozone. Last year the Swiss government pegged the Swiss franc to the euro to keep the currency competitive, after the franc repeatedly broke records soaring as much as a third against the dollar and a fifth against the euro.

Currency fluctuation was also responsible for the new presence of Australian cities like Sydney and Melbourne in the ten priciest locations. Last year the Australian dollar passed parity with the US dollar – a decade ago it held half that value.

The Worldwide Cost of Living Index compares more than 400 individual prices across 160 products and services, including food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

Asian boom

Cities from the Asia-Pacific region (including Australasia) now make up half the ten most expensive in the index. However Western Europe still accounts for 24 of the most expensive cities in the top 50, with 14 from Asia.

Although Asian hubs are appearing more frequently at the top, three of the four cheapest locations are on the Indian subcontinent, highlighting why India has been such a target of labour outsourcing, relocation and foreign direct investment over the last decade.

The cheapest cities in the ranking are dominated by Asian and Middle Eastern cities. The latter of these is due, in part, to the use of price controls and the pegging of currencies to the US dollar. The former seems to have a more structural basis, with cheap labour and land costs making India and Pakistan incredibly attractive to those bargain hungry visitors or investors willing to brave some of the security risks that accompany such low prices, especially in Pakistan, said the report.