Sydney has jumped up the list of countries too expensive to live in for skilled expatriates, according to a survey by business consulting firm Mercer.

The 2011 Worldwide Cost of Living Survey revealed that Sydney is now the 14th most expensive city in the world, a dramatic jump from 24th a year ago. Other Australian cities experienced jumps in ranking as the Australian dollar rose in value against the US dollar and the mining industry had surging demands. Perth jumped 30 places to the 30th place, while Melbourne rose 12 places to rank 21st and Brisbane ranked 31st. Adelaide rose 44 places to number 46 becoming Australia's highest riser.

"In addition to the strengthening of the currency a dramatic increase in rental prices has also pushed Australian cities up the ranking, especially in Adelaide where market supply is extremely low," Mercer senior researcher Nathalie Constantin-Metral said.

Australia's economic rise has been buoyed by a mining boom due to a rising demand for iron ore and coal in China and seven interest rate increases by the central bank. The Australian dollar rose nearly 30 percent in the past year but the country's economic competitiveness could have a downside: a higher cost of living.

The high cost of living could make it harder for foreign labor in Australia and that could be bad thing. According to Matthew Robinson, senior economist at Moody's Analytics foreign labor is important to meet skills shortages in the workplace and a higher cost of living could erode foreigner's savings.

The annual cost-of-living survey measures the cost of more than 200 common items in each of the 214 cities and includes housing, transport, food, clothing, household goods and entertainment.

The rising cost of living hasn't diminished the appeal of Australian cities according to Mercer's head of information product solutions, Georgina Harley. Australian cities are still among the most affordable destinations for businesses to invest and operate in.

"Our relatively strong economy and business growth opportunities mean employers are likely to absorb any short-term increases associated with relocating staff Down Under."