SHANGHAI IS NOW the fifth most expensive city in the world, at least according to a survey by an international consultancy. We can all celebrate with a vastly overpriced drink in the city's hottest entertainment district, Xintiandi. Xintiandi means 'New Sky and Earth' as in 'Xintiandi is new, so the prices are sky-high and they need to fall back to earth'. Shanghai moved up one notch from last year, placing just behind Beijing, which came in fourth. The cost of living is slightly higher in China's arid capital because of additional expenses for lip balm, skin moisturiser, humidifiers and breathing apparatus for sandstorms. Hong Kong placed first despite the economic downturn, followed by Moscow and Tokyo. Rounding out the top 10 behind Shanghai were Osaka, New York, St Petersburg, Seoul and London. The release of the survey coincided with the announcement of Shanghai's first-half economic statistics, which showed consumer prices rose just 1 per cent in the first six months. Food prices jumped 4.1 per cent year on year, but the cost of most other goods and services fell. Medical care prices slumped 4.2 per cent, transport and telecommunications tumbled 2.8 per cent, household goods dropped 2.3 per cent, wine and tobacco slipped 0.9 per cent and clothing edged down 0.5 per cent. Remember to ask for that 0.9 per cent discount the next time you pick up the tab at a Shanghai watering hole. With all of these falling prices, how did Shanghai manage to claw its way higher in the global rankings? The answer is of course that the survey measures the fat packages of expatriates who live in luxury villas, ride in chauffeured cars and dine on imported food. Mercer Human Resource Consulting, which conducted the study, has kept secret the prices of the 200 items in the basket of goods for the survey. But here are some alternatives for those people trying to save a little dough in the world's fifth most expensive city. Instead of shelling out 30 yuan (about HK$28) for a Grande Caramel Macchiato from Starbucks, a cup of instant joe from Maxwell House will set you back one yuan - milk and sugar conveniently included in the packet. As an alternative to the house red for 48 yuan a glass at world famous restaurant M On The Bund, glug down a whole bottle of Harvest, drinkable Chinese plonk, for about 30 yuan. Some may baulk at paying 50 yuan for the evening screening of the latest blockbuster Attack of the Clones at the new Grand Gateway cineplex. The pirated DVD is only 10 yuan, according to some people, none of whom work for Western embassies. A so-called serviced apartment adds up to US$1,000 to the monthly rent, but hiring a maid is only a few hundred yuan. An imported copy of the International Herald Tribune is 23 yuan, while the staid Wen Hui Daily is only 80 fen, except it's in Chinese. A car licence plate, not including the price of the vehicle, is a ridiculous 17,000 yuan. Taking the subway is two yuan for most rides. Instead of pricey disposable nappies for the kids, the traditional solution of a slit in a pair of pants is another possibility. The truth is that most local residents are not earning or spending as much as the 50,000 foreigners in Shanghai. To put matters into perspective, average disposable income for a Shanghai family of three was 105 yuan per day last year. While that buys a couple of shots in Xintiandi, it stretches much further for a family trying to pinch pennies - a Shanghai pastime. That 105 yuan can buy three kilograms of shrimp, six live chickens, 10kg of pork spare ribs, 50kg of rice, 50kg of vegetables or 65 bottles of milk, local media report. For 105 yuan, one can ride the subway 52 times, hop on the bus 105 times, take a taxi around the Ring Road which encircles the city or bring the family to the suburbs for a day trip. With that kind of money, one can make seven hours of local phone calls, surf the Internet for 35 hours, send 1,050 short messages over a mobile phone, buy 150 newspapers or burn up 110 cubic metres of household gas. The hawkers at the popular Xiang Yang clothing market will sell three T-shirts for 105 yuan with some bargaining. A laid-off worker in Shanghai lives on a basic allowance of less than 400 yuan per month. That is food for thought the next time you tuck into a 72 yuan hamburger at the Hard Rock Cafe. Shanghai has been so overwhelmed with foreigners and overseas Chinese flooding into the city to live the good life that police have carried out a campaign to make sure everyone is legally living and working here. The crackdown has already netted 18 illegal immigrants, 30 working without permits and 437 living in Shanghai illegally or failing to process their required resident permits. For those of you who need to know, the fine for overstaying your visa in Shanghai is 500 yuan per day.