Inflation, the RBA, wage growth, house prices... Australian investors spend so much time navigating domestic indicators that we may lose sight of the bigger picture. It is easy to get bogged down by every data release and policy debate, but sometimes the most useful perspective comes from stepping back and asking a simpler question - How do we compare with the rest of the world?
Deutsche Bank’s Mapping the World’s Prices 2026 helps bring these comparisons to the forefront, quantifying exactly what has changed over the past decade on a relative basis. This report covers 69 cities across 6 continents with prices converted to US dollars. An important thing to note is that only Melbourne and Sydney are included in this dataset.
The post-Covid inflation scorecard
Most of the time there is some amount of inflation. When the report started in the 2010s inflation was largely subdued in developed markets.
However, since Covid global inflation is well and truly back and is shaping relative prices and currencies everywhere. Cumulative CPI inflation since 2019 reveals where the cost of living has risen most in local currency terms, stripping out FX effects. Australia sits somewhere in the middle of this pack at around 30%.
Purchasing power parity
Since this report was first published in 2012 there have been big swings in inflation, growth, prices and exchange rates but one of the main enduring trends has been that the US has become notably more expensive and Japan has travelled from expensive to very cheap.
Purchasing power parity (PPP) is an economic measure used to faithfully compare living standards across exchange regions by eliminating the influence of different local price levels. Over this period on a PPP basis, the US has gotten more expensive relative to every economy covered in the report. Australia on the other hand has cheapened considerably, dropping from around 160 in 2012 to 100 in 2025, but still ranks high on a PPP basis.
Over a decade ago, Australia was one of the most expensive economies in the world, buoyed by a strong dollar and mining-boom wages. Today it sits much closer to the US benchmark, reflecting a long-term depreciation of the AUD.
Quality of life
The quality-of-life index combines purchasing power, safety, healthcare, cost of living, property-price-to-income ratio, commute time, pollution, and climate into a single score.
To the surprise of very few, Luxembourg, Copenhagen and Amsterdam top the list, retaining their rank from the previous year. Despite salary dominance, no US city makes the top 10 for quality of life, but it is important to note that there is much dispersion. New York ranks at 46th while Boston (17th) and San Francisco (21st) are comfortably in the top half of the list. The report cites a combination of high costs, long commutes and safety concerns keep American cities out of contention for the top 10.
Australia continues to score well on this front. Melbourne and Sydney remain globally competitive, both making it into the top 15. London and New York reside towards the bottom of the list, ranking 46th and 47th respectively, with very similar scores on the Safety, Cost-of-living and Traffic Commute Time measures.
Salaries and disposable income
On the domestic front, salary growth has moderately lagged inflation at a cumulative increase of ~20% for Melbourne since 2016. Notably, several Central European cities have enjoyed strong wage growth with salaries in Budapest, Prague and Warsaw doubling in 10 years, outpacing every major developed market city the report tracks.
On the topic of disposable income after rent, the index measures two people working and renting a three bedroom apartment. the data shows a meaningful drop in disposable income since 2016 for both Sydney and Melbourne.
Though we see a major divergence between the two cities where Melbourne ranks 9th and Sydney falls at 29th overall. One could perhaps attribute this to the Melbourne rental market being significantly cheaper than Sydney's.
Public transport and the 'sin tax'
As someone who regularly commutes via public transport, the costs sometimes feel extortionate. I was somewhat validated in finding out that Sydney is indeed the second most expensive for public transport coming out at US$150 for a monthly pass, surpassed only by London at over US$250.
The report also cites Melbourne ($111.2) as the world's most expensive city for cigarettes and beer, continuing Australia's relentless application of sin taxes, with Sydney second. Over a decade, Melbourne's Oasis index has risen +89%. Our Kiwi cousins across the pond, Auckland and Wellington, rank 3rd and 4th respectively.
This note only highlights select findings from the report. For those after the full version from Deutsche Bank, it can be found here.
Simonelle Mody
Also in this week's edition...
On superannuation we have Marcus Padley revealing the most common SMSF mistakes that can end up being quite costly. UniSuper’s Matt Werakso wants to help retirees navigate super’s complexity and be able to confidently use their savings to support security, wellbeing and choice. Trevor Schmid crunches the numbers on what it takes to replace market losses in super when rules and caps stand in the way.
Tony Dillon has picked up on an almost unnoticed consequence of Labor’s capital gains tax changes, which raises bigger questions.
While markets obsess over AI winners, Tim Humphreys from Ausbil has been finding the quiet, durable assets evolving beneath the AI story.
We also hear from Christine Benz and why it’s a mistake to rely on “hitting a number” for retirement.
Last week’s edition led with an article from Rachel Rofe on discretionary testamentary trusts, and due to its popularity, we are keeping this one on the home page for another week.
Our featured white paper is Dexus Research’s quarterly review of Australia’s Real Asset sector.
Curated by Simonelle Mody and Leisa Bell
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