Zurich, ranked fourth last year, took the unenviable crown in the 2012 Worldwide Cost of Living Survey by the Economist Intelligence Unit.
Tokyo was knocked down to second spot followed by Geneva and Osaka which came joint third.
Both Japan and Switzerland have seen their currencies strengthen in recent years which has made them relatively more expensive, the poll said.
Investors looking for a safe haven outside the beleaguered eurozone have invested heavily in the Swiss franc, leading last September to unprecedented action by the central bank which imposed a cap of 1.20 francs to the euro.
"Although Switzerland has long featured in, or around, the world's most expensive cities, the strong swing in currency headwinds is responsible for Zurich's current elevated position," the poll said.
The city's residents have not felt the pain too much however, as relatively cheaper imports and a stable economy are keeping local price inflation low.
Making up the top 10 most expensive cities were Oslo, Paris, Sydney, Melbourne, Singapore and Frankfurt.
The index measures the cost of an expatriate lifestyle in more than 130 cities using a weighted average of the prices of 167 products and services.