On the back of a strong dollar and rising inflation, Australian cities now rank among the world's 20 most expensive places to live.

It now costs more to live in the five mainland state capital cities than in London, New York, Rome, Los Angeles, Berlin or Hong Kong, the latest survey by the Economist Intelligence Unit has found.

Sydney leads the Australian list, globally ranked at number seven, slightly ahead of Melbourne at number eight.

10 most expensive cities in the world 1. Zurich - Switzerland 2. Tokyo - Japan 3. Geneva - Switzerland 4. Osaka Kobe - Japan 5. Oslo - Norway 6. Paris - France 7. Sydney - Australia 8. Melbourne - Australia 9. Singapore - Singapore 10. Frankfurt - Germany Source: Worldwide Cost of Living 2012

Perth is the 13th most expensive place to live in the world, Brisbane is the 14th and Adelaide is the 18th.

The report's editor, Jon Copestake, said the cost of a loaf of bread in Sydney had almost doubled in the past 10 years, while petrol had risen threefold.

Mr Copestake placed much of the blame for the high cost of living on the strong Australian dollar.

"Exchange rates have been the greatest influence for the Australian cost of living, with the Australian dollar seeing its value to the US dollar double in a decade," he said.

Local price inflation, especially last year, has also played a part, he said.

When the survey was last conducted in June, four of Australia's cities were in the top 20.

Mr Copestake said a city's desirability as a destination could also affect its cost-of-living ranking.

10 least expensive cities in the world 1. Karachi - Pakistan 2. Mumbai - India 3. Tehran - Iran 4. New Delhi - India 5. Jeddah - Saudi Arabia 6. Panama City - Panama 7. Kathmandu - Nepal 8. Algiers - Algeria 9. Dhaka - Bangladesh 10. Muscat - Oman Source: Worldwide cost of Living 2012

Cost-of-living increases in Switzerland, where the Swiss franc has emerged as a haven currency amid the eurozone crisis, led to currency-related cost pressures there.

For the first time in 20 years, Zurich outranked Tokyo as the world's most expensive city.

Switzerland, Japan and Australia each had two cities in the most expensive top 10.

The survey compares the price of more than 400 items, including food, clothing, rent, transport, utility bills and recreational costs.

At the other end of the scale, the report found the subcontinent the place to go for lower costs of living, with cities in India and Pakistan rounding out three of the four least expensive cities in the world.

Sorry, this video has expired Economist Intelligence Unit's John Ferguson discusses cost of living

AAP/ABC