British human resources firm Mercer HR has named Moscow as the most expensive city in the world for expatriate staff, for the second year in a row. The cost of real estate and imported goods is considered to be the main reason.

The strong exchange rate against the US dollar is also thought to play a role.

Expats in Moscow are either renting apartments or staying in hotels. Western companies often shell out $US 8000 per month in rental costs for one employee.

Hotel prices are also higher than anywhere in the world. Moscow lacks 3 and 4 star hotels and offers little between youth hostels on the one hand, and five-star luxury abodes on the other.

Foreigners used to a Western lifestyle will also have to deal with exorbitant restaurant bills and high car rental prices.

Supermarkets carry a lot of imported goods, which means equivalent products cost considerably more than in the West.

Analysts say that since the survey is aimed at helping multinational companies set compensation packages for their expatriate staff, it does not reflect the cost of living for Muscovites.

“We have look more deeply in to the criteria used. Definitely, Moscow apartments are expensive. However, there are other criteria I believe not used  like public transportation, which is one of the world's cheapest still. There is othe criteria like museums, alcohol and cigarette cost. If you take those things into account, basically or probably Moscow will be lower, in believe, than London. But you need to, obviously, do more careful calculations,” analyzed Ivan kotov, consultant at AT Kearney.

One should also take into account that average locals live much more modestly and have often inherited apartments.

Clearly that there are two Moscows – one for nouveau riches and foreigners willing to retain their western lifestyles and one for the locals whose expenses are significantly lower.