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Bangalore, not Mumbai, is India's costliest city

If you take rent out of the equation, Mumbai no longer reigns as the city with the highest cost of living. Bangalore has taken that mantle this year by pipping Mumbai which was the costliest city in 2011.

The recent Consumer Price Index released by the RBI on Wednesday shows that Bangalore leads with a CPI index of 200, followed by Mumbai (199) Chennai (187), Kolkata (184) , with New Delhi way behind at 181 thanks to the high rate of subsidies.

Bangalore is known to be a city with the most quality conscious consumer. AFP Photo

The CPI, calculated with 2001 as the base year, measures a standard basket of essential commodities, like food, clothing, transport, electricity, banking, education, etc.

Bangalore's high cost of living has been attributed to the city's IT sector-led growth and the high cost of fuel. Bangalore, with the highest city tax structure in the country — Karnataka has the highest state taxation — sources most consumer goods from other states, accounting for the high commodity cost. High petrol costs translate into higher commodity prices. Indicatively, LPG  costs are the highest in Bangalore at Rs 415 per 14.2 kg cylinder compared with 402 in Mumbai and the highly subsidised Rs 399 in New Delhi.

Other than that, as budget analyst Ravi Duggal told the Times of India:  "there were different reasons for differential living costs among cities, including the aspiration of people." Bangalore is also known to be a city with the most quality conscious consumer who does not mind paying a little extra; it is a city with the highest consumption of organic food stuff. The cost of education too is one of the highest in the city.