São Paulo is now placed 62nd, compared with 34th in 2006, and is followed by Rio de Janeiro in 64th place (position 40 in 2006).
Although the Brazilian real has remained stable against the US dollar over the last 12 months, the Brazilian cities surveyed have been pushed down the ranking as they give way to European cities that are ascending due to the buoyancy of the Euro.
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According to Mercer, Moscow is the world's most expensive city for expatriates for the second consecutive year. London is in second position, climbing three places since last year. Seoul moves down one place in the ranking to take third place, followed by Tokyo in fourth. Asuncion, Paraguay, on the other hand, is the least expensive city for the fifth year running.
Mercer's annual Cost of Living Survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.
It is the world's most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.
Europe dominated the top 50, placing 30 cities on the list and capturing six of spots in the top ten. Strong currencies helped push most European cities higher for 2007.
Africa placed five cities in the top 50, with Douala, Cameroon on top with a rank of 24. Four of the African cities climbed in the rankings while Lagos, Nigeria dropped from 31 to 37.
Four cities in the Middle East were in the top 50 for 2007, lead by Tel Aviv, Israel in 17th place. Istanbul, Turkey took the biggest drop in the top 50, from 15th to 38th.
Eight Asian cities were on the top 50 list, led by Seoul, Korea in third place. The biggest mover was Taipei, Taiwan which dropped from 28th to 48th.
Only two US cities made the list (New York City at 15th and Los Angeles at 42nd) thanks to the weak US dollar. No Canadian or Latin American cities were in the top 50.
New York remains the most expensive city in North America but drops five places to position 15 (score 100). Other North American cities have dropped more steeply and only New York and Los Angeles (position 42, score 87.1) rank in the top 50 cities.
"The decline of most US cities in the ranking can be attributed to the depreciation of the US dollar against the euro and other major currencies worldwide. The change reflects a reversal of the situation experienced this time last year, when the majority of US cities climbed the ranking due to the strength of the dollar," said Ms Powers.
Globally, the least costly city is Asuncion in Paraguay for the fifth consecutive year (score 50). Other low-ranking cities include Quito and Montevideo in 141st (56.3) and 140th place (58.4) respectively.
Toronto, the most expensive city in Canada, has dropped 35 places to position 82 (score 78.8). Calgary and Vancouver have also tumbled down the rankings, sliding from 71st place to 92nd and 56th to 89th respectively.
Ottawa remains the cheapest Canadian city in 109th position scoring 72.3. Canadian cities have traditionally rated favorably in the worldwide ranking. The new scores reflect a low rate of inflation and stable housing prices. In addition, while it has appreciated slightly against the US dollar, the Canadian dollar has depreciated nearly 13% against the euro since last year's survey.
Mercopress