While it appears that the price of a Big Mac has decreased in Turkey, this is because the prices are shown in U.S. The country has been plagued by hyperinflation for years, so it’s no surprise to see large price swings in the country’s data. Venezuela has seen the largest jump in burger prices, with the cost of a Big Mac climbing nearly 250% since 2004. Both countries have relatively high price levels but also enjoy higher wages when compared to other OECD countries. Switzerland takes the cake for the priciest Big Mac, followed closely behind by Norway. Below, we show the change in price of a Big Mac in select countries, ordered by January 2022 prices. dollars based on the actual exchange rate in effect at the time. In the animation, all Big Mac prices have been converted from local currency to U.S. dollar-we are also able to see where burgers are cheaper or relatively more expensive. If we compare the price of a Big Mac across countries in the same currency-such as the U.S. For instance, it shows inflation in burger prices over time. By comparing the implied exchange rate to the actual exchange rate, we can see whether the Yuan is over or undervalued.Īccording to the Big Mac Index, the Yuan is undervalued by 34%.īeyond currency misalignment, the index has other uses. For example, a Big Mac costs ¥24.40 in China and $5.81 in the United States. Using the price of a Big Mac in two countries, the index can give an indication as to whether a currency may be over or undervalued.
It also has the advantage of having the same inputs and distribution system, with a few minor modifications (like chicken patties in India instead of beef). Given that McDonald’s is one of the biggest companies in the world and the Big Mac is widely available globally, it means that the famous burger can be used as a basic goods comparison between most countries. In other words, it helps illustrate the idea that market exchange rates between countries may be “out of whack” when compared to the cost of buying the same basket of goods and services in those places. It is intended to be a lighthearted way to demonstrate the concept of purchasing power parity. The Big Mac Index was invented by The Economist in 1986. dollar price of a Big Mac in select countries around the world. Spanning from 2004-2022, this animation from James Eagle shows the U.S. However, the price you pay will vary based on where you are, as evidenced by the Big Mac Index. the following year, and today you can buy one in more than 70 countries. The Big Mac was created in 1967 by Jim Delligati, a McDonald’s franchise owner in Pennsylvania. The Big Mac Index: A Measure of PPP and Burger Inflation
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