London rises to the rank of the most expensive cities while Paris loses first place Business

EIU’s Upasana Dutt said social restrictions around the world have disrupted the supply of goods, leading to shortages and soaring prices.

She said: “Over the coming year, we expect the cost of living to rise further in many cities as wages rise in many industries.

“However, we also expect central banks to hike interest rates, cautiously, to contain inflation. Price increases should therefore start to moderate.”

The survey found that rising prices contributed to the fastest increase in the cost of living for city dwellers in half a decade, with the cost of goods and services rising an average of 3.5% per year in local currency, compared to an increase of 1.9 pc a year ago.

Transportation costs were found to have increased the most, mainly due to higher oil prices leading to a 21% increase in the price of unleaded gasoline. Leisure, tobacco and personal care categories also increased.

Experts predicted that the cut in the cost of living in Britain would get worse. Food price inflation in the UK peaked 14 months at 2.1% in October, according to Kantar.