How is a city supposed to feel when it has just learned it is no longer the world’s most expensive in which to live? Peeved, since there’s a certain cachet attached to being No. 1 anything? Relieved, since a reputation for overpricing isn’t the kind of cachet any self-respecting city actually needs?

Or should it feel indifferent, since the criteria used to determine these annual cost-of-living rankings are focused more on expatriates’ expenses than those of locals?

Tokyo had to juggle all these feelings last week after Mercer Human Resource Consulting announced that Moscow and Seoul had pushed it out of the plush spot it has held for the past four years. Of the 144 cities surveyed, Tokyo now ranks third in terms of the cost of more than 200 items, including transportation, food, clothing and entertainment, with Hong Kong and London rounding out the top five.

It turns out, though, that the factors chiefly responsible for reshuffling in this year’s rankings are exchange-rate fluctuations and housing costs. Moscow leapfrogged from fourth to first largely on the strength of a property boom there, while the slippage of Tokyo and Osaka (which went from second to sixth) was attributed mostly to a softer yen.

Prices didn’t actually drop here. Visitors can rest assured that it is still possible to pay an arm and a leg for an apartment in Hiroo or a cup of coffee in Ginza.

Mercer carries out these surveys for a perfectly practical reason: to help multinational employers figure out how much to compensate workers they send abroad. For the cities themselves, however, the results present a bit of a public relations dilemma. How do you spin the designation of the world’s costliest metropolis? In Tokyo’s case, being No. 1 has proved a dubious distinction, fueling a tired stereotype of bubble-era excesses that outweighed any suggestion of glamour. That’s why we think this is one demotion rather worth celebrating.

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