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Cost of living in Tokyo falls but is still expensive

The price gap between Tokyo and major Western cities narrowed in 1996, but the Japanese capital remains an expensive place to live and work, a Japanese government survey showed on Monday.

The Economic Planning Agency (EPA) reported that prices in Tokyo, on average, were about 1.33 times higher than those in New York in 1996, the smallest gap between the two cities in six years.In 1995, Tokyo prices were 1.59 times higher than New York's.

Tokyo also became cheaper relative to the four European cities covered in the survey, and was overtaken by Geneva as the most expensive city, only the second time it has given up that title since the survey began in 1985.

In 1996, prices in Tokyo were 1.28 times higher than in London, 1.19 times greater than in Paris and 1.24 times higher than in Berlin, the survey showed.

The survey began in 1985 as a comparison of prices in Tokyo and New York. The European cities were added later.

"Although the price gap between Tokyo and New York is getting smaller, it is too early to stop worrying," said an agency official.

The nagging persistence of higher prices was bound to be unwelcome news for Prime Minister Ryutaro Hashimoto, whose government is committed to cutting red tape and lowering prices as a means of encouraging foreign investment and boosting Japan's fragile economy.

Foreign firms have complained that high living costs are a key reason for their reluctance to set up shop in Tokyo.

The survey, which covered about 400 items, showed that food, clothing, housing, energy and footwear were particularly expensive in Tokyo.

A can of beer is more than twice as expensive in Tokyo than in New York or Paris, and more than four times pricier than in Berlin. Tokyoites also pay twice as much as residents of the other cities to see a movie at the cinema.

Some consumer items, however, including photographic film, video cassette recorders and home video rentals, cost less in Tokyo than in other cities.

While the survey did not include Asian cities, it made a brief comparison of prices for 10 items in Tokyo, Singapore and Hong Kong.

Most of the 10 items, including rice, pasta and compact discs, were more expensive in Tokyo than in the other two cities, although a liter of orange juice and video cassette recorders were cheaper in Tokyo.

The agency also included two new cities, St. Louis in the United States and Kanazawa in central Japan, in its annual survey.

The agency official said a comparison of "average" regional cities would give a better sense of the overall price gap between Japan and the United States.

Prices in Kanazawa, on average, were 1.57 times higher than those in St. Louis, with energy, housing and food particularly more costly in Kanazawa than in the Midwestern U.S. city.