London gets cheaper (if you grow your hair)

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Londoners may bemoan the crippling cost of living but spare a thought for the inhabitants of Tokyo where a meal for four can set you back £530. While still among the most expensive places in the world, the British capital has slid two places down the list of costly cities to eighth position.

As expected the Japanese capital - where a litre of mineral water is almost £3 - retains its lead in The Economist intelligence unit's bi-annual survey for business executives. Others with the dubious honour of heading the list are Oslo where a bottle of fine wine costs £68. The Norwegian capital has leapfrogged Osaka (where children's jeans are £33, double the London price) into second place.

A robust economic performance, a strengthening krona as well as inflation boosted by rising property and oil prices, has helped Reykjavik rise from eighth to fourth. These days an average paperback costs £14 in the Icelandic capital and only half that in London.

Paris, Copenhagen and Zurich are all deemed more expensive than London, with Geneva and Helsinki close behind. Sterling's relative fall over the past year was credited with making London less expensive for expatriate workers from Europe or America.

The Worldwide Cost of Living survey compares the cost of a representative basket of goods and services in dollar terms from more than 130 cities. It compares everything from the price of a loaf to the cost of dry cleaning, electricity bills to cinema tickets, taking an average price from a range of products. John Copestake, the editor of the survey, said: "The main reason London has dropped is not that it has got cheaper but other cities, such as Oslo and Reykjavik, have risen. London is still very expensive."

In some areas, the UK capital still leaves other countries standing. A four-bedroom home costs £2,802 a month to rent compared with £811 in Oslo and a family car £24,364, double what a Tokyo resident pays. Even a tube of toothpaste is £2.45 compared to 76p in Osaka.

Static prices have pushed the US further down, with no American city making the top 30. New York (35th) is now cheaper than destinations such as Wellington, Barcelona and Seoul. The lowest ranking in Europe was Belgrade (108th). Tehran remains the world's cheapest city.