According to the list compiled by the consultants, Angola's city of Luanda has been ranked as the most expensive in the world for a second year running.
The survey of 214 cities worldwide covered the comparative costs of over 200 items, such as housing, clothing, food, transport, goods and entertainment.
Tokyo was named as the most expensive city in Asia as well as the world's second most expensive metropolis.
N'Djamena in Chad came in third place, with Moscow at number four followed by Geneva and Osaka in fifth and sixth places respectively. Zurich jumped one position to rank seventh, while Hong Kong dropped down to ninth.
Singapore is new to the top ten of the list at number eight, up form 11, and Sao Paolo leapt up 11 places since the 2010 report to settle at ten.
Londoners have reason to smile as the city dropped one place to 18, however it remained the UK's most expensive region.
Aberdeen was the next most expensive city for the country at 148, followed by Birmingham at 150, while Belfast was named the UK's cheapest at 178.
Karachi was ranked as the world's least expensive city at 214, with prices in the region being a third of what they were in top-ranked Luanda.
Mercer explains that recent world events, such as natural disasters and political upheavals, have impacted the rankings of many regions through currency fluctuations and inflation.
Senior researcher Nathalie Constantin-Metral said that multinational companies need to understand the fluctuations in prices across the globe to offer competitive services.
Overall, she explained, Europe remained stable but sharp increases in North American petrol costs contributed to rising consumer prices and Australian cities witnessed a "dramatic" rise in rankings as their currency strengthened against the US dollar.