The idea of Latin America and the Caribbean as budget-friendly destinations is being rapidly challenged in 2025. According to the Cost-of-Living Index published by Numbeo, several countries and territories across the region are now among the most expensive in the world to live. From luxury-driven Caribbean islands to South American economies with strong institutions, the ranking shows how prices for food, rent, transportation, and everyday goods are reshaping financial realities for locals, expatriates, and travelers alike.
Important to highlight that Numbeo is a user-contributed online database that collects and shares information about living conditions around the world. It was founded in 2009 by former Google software engineer Mladen Adamovic, and has grown into one of the most frequently cited sources for comparing cost of living, housing, health care, crime rates, traffic, and quality of life across countries and cities.
Why Caribbean islands are among the most expensive places to live
The latest Numbeo index places the Cayman Islands at the top of the cost-of-living scale, with a score of 108.18. This means living there is roughly 8%t more expensive than in New York City, and that’s before even accounting for housing. The question naturally arises: why does life cost so much in these sun-soaked islands?
Economists often point to geography as the first explanation. The Cayman Islands, much like the Bahamas and other island nations, depend heavily on imports to satisfy local demand. Almost everything — from basic groceries to fuel and construction materials — must be brought in from abroad. With shipping fees, customs, and logistics layered onto the final price, residents often pay significantly more than their mainland counterparts for the same goods.
But import dependency tells only part of the story. The Cayman Islands have become a magnet for global wealth, attracting millionaires, international banks, and luxury tourism. The real estate market reflects this status, with property values and rents pushed to levels inaccessible for many locals. Supermarkets and restaurants, catering to both affluent residents and visitors, adopt pricing structures more aligned with New York or London than with Latin America.
The tourism cycle also plays a role in shaping prices. During high season, when thousands of visitors flood the islands, businesses adjust their rates to maximize profits and compensate for slower months. This seasonal surge keeps the overall cost structure elevated year-round, even when demand dips.
The presence of global capital has cemented the Cayman Islands as a playground for the wealthy. Reports estimate that in 2024 the archipelago was already home to nearly 6,800 millionaires, over a hundred centimillionaires, and at least a dozen billionaires. In 2025, another 200 high-net-worth individuals are expected to relocate there, bringing billions of dollars into the local economy.
Yet analysts caution that this influx does not necessarily translate into shared prosperity. While luxury condos rise along the coastline, many long-time residents continue to struggle with rising grocery bills and housing shortages. The wealth gap is widening, leaving parts of the population feeling left out of the so-called boom.
Following closely behind the Caymans in Numbeo’s index are the Bahamas (85.36) and Puerto Rico (59.75). Puerto Rico’s unique status as a U.S. territory adds complexity, but the reality is similar: residents face high grocery and housing costs that weigh heavily on household budgets. In both territories, the combination of high-end tourism and reliance on imports creates a two-speed economy, comfortable for outsiders earning in stronger currencies, but increasingly difficult for locals whose wages lag behind.
Uruguay and Costa Rica lead South America in living costs
Moving away from the islands, South America presents a different story. Here, the most expensive countries — Uruguay and Costa Rica — do not top the global charts but stand out regionally. Uruguay, with a cost-of-living index score of 51.34, is consistently ranked among the priciest countries on the continent. Montevideo, its capital, combines relatively high housing costs with strong demand for imported products. Yet Uruguay’s case is nuanced: while prices are high, the country also boasts one of the region’s strongest purchasing power levels. A stable economy, progressive social policies, and a high minimum wage allow many Uruguayans to maintain a standard of living that balances the burden of costs.
Costa Rica follows closely with a score of 50.27, and here the picture is equally complex. The country’s strongest cost driver is food. Numbeo’s data shows that groceries in Costa Rica are significantly more expensive than the regional average, impacting families directly through higher household bills. But these costs coexist with the benefits of a relatively high national income level. In fact, the World Bank recently upgraded Costa Rica to the “high-income” category, with a gross national income per capita above US$13,935. For many Costa Ricans, rising prices are offset by better access to health care, education, and infrastructure compared to other parts of Central America.
In both Uruguay and Costa Rica, the higher cost of living reflects structural stability rather than just scarcity. Unlike in the Caribbean, where prices are heavily influenced by isolation and luxury markets, these South American nations show how economic development and social progress can also elevate costs. For expats and retirees, the balance of safety, services, and political stability often justifies the expenses. For locals, however, salaries must continually rise to keep pace with inflationary pressures.
Where life is cheaper and why that isn’t always a good thing
The Numbeo report also identifies the most affordable countries in Latin America, with Paraguay, Bolivia, and Colombia appearing at the bottom of the ranking. Paraguay, with a score of 22.82, is officially the cheapest place to live in the region, followed by Bolivia at 25.50 and Colombia at 28.00.
At first glance, these numbers might suggest an advantage. Lower costs for food, rent, and transportation can make these countries attractive to budget-conscious expats or digital nomads. Yet analysts warn against assuming affordability equals prosperity. In many cases, prices are lower precisely because of weaker economic performance and limited growth. When wages and job opportunities remain stagnant, even cheap groceries and rent can feel out of reach for locals struggling to cover basic needs.
Take Colombia, for example. Although the cost-of-living index is far lower than in the Caymans or Costa Rica, Colombian households face challenges with low purchasing power. Many families spend a disproportionate amount of their income on food and housing, leaving little room for savings or discretionary spending. Bolivia and Paraguay face similar realities, where economic inequality and limited industrial development keep local markets affordable in nominal terms but leave many citizens vulnerable.
This dynamic reveals an important nuance: a “cheap” country is not necessarily one where life feels easier for its people. Instead, the contrast between high-cost and low-cost nations in Latin America underscores the region’s diversity. On one side are economies such as Uruguay and Costa Rica, where higher prices accompany stronger social protections. On the other are nations like Bolivia and Paraguay, where affordability reflects slower growth rather than prosperity.
What these rankings mean for the future of the region
Numbeo’s 2025 cost-of-living report illustrates how Latin America and the Caribbean are undergoing major shifts in affordability. For the Caribbean islands, prices will likely remain high as long as global capital and luxury tourism dominate their economies. For South America, higher costs in places such as Uruguay and Costa Rica may become the price of maintaining political stability, social services, and middle-class lifestyles. Meanwhile, cheaper countries will continue to struggle with the paradox of low costs paired with limited purchasing power.
For families and workers across the region, the implications are deeply personal. Rising costs mean reevaluating budgets, considering migration, or adapting lifestyles to new realities. For expatriates and digital nomads, the decision of where to live becomes increasingly tied to balancing quality of life with affordability. And for governments, the challenge is balancing competitiveness with fairness, ensuring that prosperity does not become the privilege of only a few.
As 2025 unfolds it is clear that Latin America and the Caribbean can no longer be painted with a single brush. Some corners of the region are now among the world’s most expensive places to live, while others remain affordable but face structural limitations. The spectrum of experiences shows just how complex and dynamic life in the Americas has become.