Dublin is the 16th-most expensive city in the world along with Milan and Sydney, according to a survey published today.
The capital has jumped five places from last year's 21st in the survey by the Economist Intelligence Unit (EIU), which compares the cost of goods and services across the world.
Tokyo's 14-year spell as the most expensive city has been ended by Norwegian capital Oslo
Iceland's capital, Reykjavik jumped to third place ahead of Japan's Osaka and eight of the top 10 cities are in Europe. New York, the highest-ranked US city, fell to 27th place.
The rise of Oslo and other European cities partly reflects the long-term under performance of the US currency.
"The displacement of Tokyo comes as little surprise. A gradually weakening yen has been compounded by years of low inflation and deflation in the Japanese economy," the EIU said.
"Norway has seen strong economic growth following a recovery in 2004, enjoying high consumer confidence, rampant investment and still-low interest rates." Several eastern European countries also became more expensive.
The main cities in Serbia and Montenegro, Romania, Ukraine, Poland, the Czech Republic and Turkey all saw a relative increase of more than 5 per cent in the cost of living.
In Latin America, the two biggest jumps came in Brazil, with Rio de Janeiro and Sao Paulo climbing 22 places to joint 87th on the back of a 25 per cent rise in the currency and rising consumer prices.
Iran's capital, Tehran, remains the cheapest of the 130 cities ranked worldwide by the EIU.