Is Moscow expensive? Only if you want it to be

MOSCOW, June 28: Giorgio Armani, Ferrari, Bentley: the brand names along Moscow's central thoroughfare look like clear proof that the Russian capital deserves its new title as the world's most expensive city.

But Svetlana Dmitrievna, 60, whose scruffy newspaper kiosk is an incongruous addition to the row of gleaming boutiques and showrooms, thinks the impression is misleading.

When told the prices that propelled Moscow to the top of Mercer Human Resource Consulting's cost of living survey -- specifically that it listed an international newspaper as costing six dollars -- she exploded with rage.

''Look at my newspapers, the most expensive is 15 roubles and that is only half a dollar. To say these are more expensive in the West, well, it's just silliness,'' she said.

''I have relatives in New York and they tell me the prices there are just crazy compared to here.'' Mercer defended their survey against such criticism, with Anna Krotova, a senior researcher in Geneva, saying it was designed to show how much was paid by ''high-income people'', not the man on the street.

And economists said it revealed the skewed economy of Moscow, a city where a metro ticket costs 50 cents but a cappuccino costs five dollars, where luxury prices are driven up by the super-rich while the cost of living remains low.

The survey compared costs in 144 cities for scores of items such as housing, transport, food, clothing and entertainment.

Moscow replaced Tokyo as the world's most expensive city.

It found a luxury two-bedroom unfurnished apartment costs 3,000 dollars a month to rent in Moscow, more even than London and almost twice as expensive as the likes of Rome and Dublin.

Property prices in less sought-after areas of Moscow are more reasonable but some Russians complain that they can no longer afford housing in the city's over-heated market.

''Luxury apartments are one area where you can find prices like those in Manhattan. But most of what you see here (in the survey) is from the perspective of a businessman,'' said Peter Westin, an analyst at Moscow's MDM-bank.

''The reason most of these things are expensive is that there are people who are willing to pay these prices. There is nowhere else in Europe, or maybe in the world, where a businessman can buy cognac for 600 dollar a glass. I have seen them do this here.'' For most people in Russia, where the average monthly wage at the end of last year was a little over 300 dollar -- or just 12 CDs according to Mercer's price list -- and many gas and utility prices are still subsidised, the high prices paid by the international jetset are irrelevant.

But not for Sergei, 39, a taxi driver who has a pitch outside Moscow's high-class Savoy hotel. For him, rich visitors are an opportunity not to be missed.

''If you wanted me to take you to a bar and it was across the street but you didn't know where it was, I'd charge you 20 dollars.

It beats working for a living,'' he said, declining to give his surname as he lent on his car and enjoyed the June sun.

''I'll wait here for two or three hours and then get one fare that will keep me going all day. It's people like me that make foreigners think Moscow is expensive.''

REUTERS