Economic problems and growth in emerging markets have seen cities in Europe become cheaper in the past year and "relatively stable" in the UK, according to a new report.
A study of transport, utilities, food, clothing and other items in 131 cities across the world showed that Tokyo was the most expensive for cost of living.
London moved up one place to 16, while Manchester jumped six to 47, the study by the Economist Intelligence Unit found.
London was the third most expensive city three years ago, and Manchester was 28 in the table.
Cities in Australia have jumped up the list, with Sydney now the third most expensive city in the world, and Melbourne in fifth place. The least expensive cities included Mumbai.