According to the article from EXAME magazine (through Google Translate):
“The overvalued currency and the boom in property prices transformed Sao Paulo into the most expensive city in the Western Hemisphere, and the world’s 10th in cost of living, surpassing London, Paris and New York. The data was published today by consultancy firm Mercer. The arrival of a large amount of foreigners in recent years, hired by multinational companies, also fueled the price boom and blew up the living costs in the city.”
“In 2010, the Sao Paulo state capital was only the 21st most expensive city in the world. Rio de Janeiro occupied a modest position at 29th, and Brasilia was only the 70th most expensive city in the world. But with economic growth at more than 7% in 2010, the boom in housing prices and, especially, the brazilian Real appreciation against the U.S. dollar significantly impacted the ranking.”
In another article I found a couple examples of local pricing distortions:
A recent survey of prices conducted by Super Interestante Magazine gave the example of the iPad. In Brazil, as in the U.S. or Europe, it is imported from China. In theory, it should cost almost the same in all countries, as freight is more or less the same. However, the basic version costs R$800 in the U.S. while in Brazil it costs R$1,800.

Another example is the Corolla car costs R$28,000 in the U.S. yet in Brazil costs over R$60,000. Toyota manufactures the car in both countries, therefore there is no import tax to be considered. Almost half the value of a car (40 percent) goes to the Brazilian government in the form of taxes. In the U.S. it is twenty percent as in China, in Argentina it’s 24 percent.”
Full article here

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