I am always arguing with my friends from other countries on this issue. In some ways, living costs in Shanghai is cheap, because goods here is cheaper. But it will be very expensive when it comes to buying a house, drinking coffee in the downtown, especially in the area of attractions. So prices in different areas are not comparable, not to mention in different of countries. I can get a cup of coffee at the price of 1 RMB from vendor machine, and I can also spend 100 RMB to have a drink in the downtown. I can have a bowl of noodles in our canteen at 6 RMB, but I have to pay 30 if I go to Pizzahut. You can buy one bottle of purified water in supermakets at 1 RMB, but you might need to pay 30 if you are on the top of Tai Mountain.
I really don't know how this kind of reports do their surveys, what kind of price you will provide when they do the survey. But I know in China, it makes a great difference on the prices in different places. If the shop is in downtown, the owner need to pay a higher rent, and also most probably if they are in a high population density place, no need for them to make advertisement, because people will go there automatically.
I recommend you to go to this website, original article is from http://home.wangjianshuo.com/archives/20050925_do_you_believe_in_living_cost_index.htm