Tokyo has gotten really cheap while the U.S. gets pricier

The cost of living in Japan has gotten exceptionally cheap in dollar terms compared with other developed countries, while major U.S. cities have grown ever more pricey, a new report finds.

Why it matters: Inflation, a stronger dollar and a weaker yen, plus larger structural economic shifts, have scrambled the cost-of-living map around the world.

• "The old assumptions about which places are expensive, which are cheap and where wages compensate for living costs no longer always hold," wrote the authors of the new paper from the Deutsche Bank Research Institute.

The latest: Coming into Tuesday's inflation report, the U.S. had the highest rate of inflation among G7 countries, as economist Justin Wolfers noted, citing the latest available readings from the OECD.

• Consumer prices in the U.S. fell 0.4% in June from May, thanks mostly to a big drop in energy prices after the U.S. and Iran signed a ceasefire deal.
• But that deal has since unraveled, and oil prices have since soared — a sign that the inflation reprieve may be short lived.

Catch up quick: Back in 2012, when Deutsche Bank started doing this global cost-of-living report, Tokyo was typically ranked one of the most expensive cities in the world.

Where it stands: Now, Japan is among the cheapest developed economies in the world, and cities in the U.S. like New York and San Francisco are among the priciest.

• Since 2012, the yen has fallen 51% in value against the dollar, but prices in the country are up only about 20% — a bargain for anyone spending greenbacks.

Between the lines: In 2012, as the U.S. was still recovering from a bruising recession and the dollar was weak — there were doubts about the country's economic health. In hindsight, it was a good time for investors to increase their exposure to U.S. assets.

• This year's report arguably makes a similar case for Japan.
• "Today I look at how cheap Japan is, and it's not hard to argue that people should increase their exposure," Jim Reid, head of the Deutsche Bank Research Institute, tells Axios.

How it works: The bank looked at 69 cities across six continents and converted prices into dollars — it compared the costs of housing and dining out, as well as things like the price of a "cheap date" and an iPhone, using data from Numbeo, which maintains a global database of prices.

• Tokyo ranks near the middle or bottom of the bank's tables for many expenses — 57th most expensive for a meal for two, 40th most expensive for renting a three-bedroom apartment.

• A meal for two in New York, Zurich or Geneva now costs around three times as much as it would in Tokyo, in dollar terms, per the report.
• Japan is now the cheapest place in the world to buy an iPhone, after accounting for taxes. A cappuccino in Tokyo is cheaper than in 44 of the 69 cities examined, including many emerging-market locales.

Stunning stat: The average monthly cost of renting a three-bedroom apartment in New York is $8,900 — more than $2,000 more than the next priciest city, Zurich.

• In Tokyo, it's $2,400.
• Yes, but: Averages can skew the numbers a bit, as super pricey rentals get thrown into the mix.

Reality check: More expensive doesn't reflexively mean "bad."

• "Being expensive isn't necessarily an outright negative. It can be just because the economy runs well and attracts a lot of inflows," Reid says.

The bottom line: Time to book a flight to Tokyo?