What a cost-of-living index of 100 actually means

If you've browsed any relocation site, you've seen a city described with a single number — an index of 62, or 154, or 100. It looks precise, but most people have no idea what it's counting. Here's the honest version.

The baseline is a choice, not a law of nature

A cost-of-living index needs a reference point. On CostTrek, and on most English-language tools, that reference is the average US city, set to 100. So a city at 60 is roughly 40% cheaper than a typical American city; a city at 150 is about 50% more expensive. The baseline could just as easily be London or the world average — the numbers would shift, but the ranking between cities would stay the same.

What goes into the number

A good index blends several baskets of spending, not just rent: housing, food and groceries, transport, utilities, healthcare and everyday goods and services. Housing usually carries the most weight, because it's the biggest and most variable cost. That's why a city can look "cheap" overall while a specific category — say, transport or healthcare — is actually pricey.

Read the breakdown, not just the headline

The single index is a starting point, never the answer. Two cities with the same overall number can feel completely different: one with cheap rent and expensive food, another the reverse. Always open the category breakdown and weigh it against how you spend. A car-dependent suburb and a transit-rich downtown will hit your budget in very different places.

Indices are estimates — treat them that way

Prices move constantly, currencies swing, and no dataset is perfectly current for every city. Use the index to shortlist and compare, then verify the two or three costs that matter most to you — usually rent and taxes — against a local, up-to-date source before you commit.

Ready to see it in action? Compare any two cities or browse the cheapest cities in our index.