At 8.17 U.S. dollars, Switzerland has the most expensive Big Macs in the world, according to the January 2024 Big Mac index. Concurrently the cost of a Big Mac was 5.69 dollars in the U.S., and 5.87 U.S. dollars in the Euro area.
What is the Big Mac index?
The Big Mac index, published by The Economist, is a novel way of measuring whether the market exchange rates for different countries’ currencies are overvalued or undervalued. It does this by measuring each currency against a common standard – the Big Mac hamburger sold by McDonald’s restaurants all over the world. Twice a year the Economist converts the average national price of a Big Mac into U.S. dollars using the exchange rate at that point in time. As a Big Mac is a completely standardized product across the world, the argument goes that it should have the same relative cost in every country. Differences in the cost of a Big Mac expressed as U.S. dollars therefore reflect differences in the purchasing power of each currency.
Is the Big Mac index a good measure of purchasing power parity?
Purchasing power parity (PPP) is the idea that items should cost the same in different countries, based on the exchange rate at that time. This relationship does not hold in practice. Factors like tax rates, wage regulations, whether components need to be imported, and the level of market competition all contribute to price variations between countries. The Big Mac index does measure this basic point – that one U.S. dollar can buy more in some countries than others. There are more accurate ways to measure differences in PPP though, which convert a larger range of products into their dollar price. Adjusting for PPP can have a massive effect on how we understand a country’s economy. The country with the largest GDP adjusted for PPP is China, but when looking at the unadjusted GDP of different countries the U.S. has the largest economy.
FAQs
At 8.17 U.S. dollars, Switzerland has the most expensive Big Macs in the world, according to the January 2024 Big Mac index. Concurrently the cost of a Big Mac was 5.69 dollars in the U.S., and 5.87 U.S. dollars in the Euro area.
What is the Big Mac Index in Costa Rica 2024? ›
In Costa Rica, the average price for a Big Mac burger was estimated at 5.71 U.S. dollars in January 2024. Costa Rica price for a Big Mac is among the highest in Latin America, only behind Uruguay.
What is the Big Mac purchasing power index? ›
The Big Mac PPP is an informal index used to compare the purchasing power between currencies as compared to the price of a McDonald's Big Mac. Another name for the Big Mac PPP is the Big Mac Index. Currencies are compared against the local price of a Big Mac in that nation's currency.
Is Big Mac Index a good indicator of inflation? ›
Though Big Mac inflation does seem to track CPI inflation, its path can diverge from overall inflation because of price deviations relative to other goods and services in the U.S. consumer basket.
What is the most overvalued currency in the Big Mac Index? ›
The most overvalued currencies are the Swiss franc, Norwegian krone, Uruguayan peso, Euro, Swedish krona, Costa Rican colón, British pound, and Danish krona. The Big Mac Index, compiled by The Economist, offers an innovative approach to assess if currencies around the world are overvalued or undervalued.
Is Big Mac Index a good indicator? ›
The Big Mac Index measures the cost of a Big Mac in different countries and indicates the difference in purchasing power parity between them. It has become accepted as a fairly reliable currency parity indicator for developed, developing, and non-developed countries (as long as Big Macs are sold there). Economist.
How much is a Big Mac in South Africa 2024? ›
Using the 'raw' direct conversion data, a Big Mac costs R51. 90 rand in South Africa (up from R49.
Which currency is undervalued? ›
The currencies of South Korea, China, and the Eurozone are now all undervalued by more than 20%, giving those nations substantial advantages in global markets and especially in exporting to the U.S. Since 2011, the U.S. dollar has risen by 48%, as measured by the Federal Reserve's broad dollar index.
How much is a Big Mac in Mexico? ›
Prices for a Big Mac in Mexico from 2010 to 2024 (in U.S. dollars)
| Characteristic | Average price in U.S. dollars |
|---|
| 2022 | 3.34 |
| 2021 | 2.68 |
| 2020 | 2.66 |
| 2019 | 2.54 |
9 more rowsMar 8, 2024
UberFacts on X: "💰 Hourly minimum wage vs 🍔 Big Mac price 🇺🇸: 1980: $3.10 vs $1.60 1991: $4.25 vs $2.44 2022: $7.25 vs $5.93" / X.
A Big Mac by itself cost just $1.60 in 1986.
What is the Big Mac Index for undervalued currency? ›
If the exchange rate is less than the PPP, the currency is undervalued. The theory behind PPP and the Big Mac index is that the exchange rate will adjust over the long run to the point where there is parity between the countries. Comparing the price of a Big Mac among countries tells us when to invest and when to wait.
How to interpret Big Mac Index? ›
If the value obtained is more than the exchange rate, then the first currency is overvalued. Conversely, if the value is lower than the exchange rate, then the first currency is undervalued compared to the second. The index also introduced a new word, “Burgeronomics”.
How much was a Big Mac in 1996? ›
In 1996, the cost of a Big Mac was $2.36. In June 2012, the cost of a Big Mac was $4.33. With the latest data in December 2021, the cost of a Big Mac was $5.81. This $3.45 increase in the cost of a Big Mac is the effect of inflation over the past 25 years.
How much was a Big Mac in 2004? ›
Burger Costs Around the World
| Country | May 2004 | January 2022 |
|---|
| United States | $2.90 | $5.81 |
| Sweden | $3.94 | $5.79 |
| Israel | $2.79 | $5.35 |
| Canada | $2.33 | $5.32 |
31 more rowsFeb 16, 2022
Download Table Data
| State | Big Mac Index |
|---|
| New Jersey | $5.19 |
| California | $5.11 |
| Maryland | $5.03 |
| Connecticut | $4.95 |
46 more rowsThe Big Mac Index is a survey done by The Economist that examines the relative over or undervaluation of currencies based on the relative price of a Big Mac across the world.
Where does a Big Mac cost $18? ›
So, we should pay attention when Americans get all hot and bothered about the rising cost of eating our favorite dish at their favorite place. An image from a Darien, Connecticut, McDonald's rest stop last July went viral because it showed that a Big Mac combo meal was priced at $18.
