Currency
The Big Mac Index: A Measure of Purchasing Power Parity & Burger Inflation
The Big Mac Index: A Measure of PPP and Burger Inflation
The Big Mac was created in 1967 by Jim Delligati, a McDonald’s franchise owner in Pennsylvania. It was launched throughout the U.S. the following year, and today you can buy one in more than 70 countries. However, the price you pay will vary based on where you are, as evidenced by the Big Mac Index.
Spanning from 2004-2022, this animation from James Eagle shows the U.S. dollar price of a Big Mac in select countries around the world.
What Does the Big Mac Index Show?
The Big Mac Index was invented by The Economist in 1986. It is intended to be a lighthearted way to demonstrate the concept of purchasing power parity. 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.
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. 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).
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. For example, a Big Mac costs ¥24.40 in China and $5.81 in the United States. By comparing the implied exchange rate to the actual exchange rate, we can see whether the Yuan is over or undervalued.
According to the Big Mac Index, the Yuan is undervalued by 34%.
Beyond currency misalignment, the index has other uses. For instance, it shows inflation in burger prices over time. If we compare the price of a Big Mac across countries in the same currency—such as the U.S. dollar—we are also able to see where burgers are cheaper or relatively more expensive.
Burger Costs Around the World
In the animation, all Big Mac prices have been converted from local currency to U.S. dollars based on the actual exchange rate in effect at the time. Below, we show the change in price of a Big Mac in select countries, ordered by January 2022 prices.
Country | May 2004 | January 2022 | % change |
---|---|---|---|
Switzerland | $4.88 | $6.98 | 43% |
Norway | $5.18 | $6.39 | 23% |
United States | $2.90 | $5.81 | 100% |
Sweden | $3.94 | $5.79 | 47% |
Israel | $2.79 | $5.35 | 92% |
Canada | $2.33 | $5.32 | 129% |
Venezuela | $1.48 | $5.06 | 243% |
Euro area | $3.29 | $4.95 | 51% |
Denmark | $4.46 | $4.82 | 8% |
Britain | $3.37 | $4.82 | 43% |
New Zealand | $2.65 | $4.60 | 73% |
Australia | $2.27 | $4.51 | 98% |
Singapore | $1.93 | $4.36 | 126% |
Brazil | $1.70 | $4.31 | 154% |
Argentina | $1.48 | $4.29 | 190% |
Sri Lanka | $1.41 | $4.15 | 193% |
Czech Republic | $2.13 | $4.11 | 93% |
Chile | $2.18 | $3.88 | 78% |
Thailand | $1.45 | $3.84 | 166% |
China | $1.26 | $3.83 | 205% |
South Korea | $2.72 | $3.82 | 40% |
Poland | $1.63 | $3.44 | 111% |
Japan | $2.32 | $3.38 | 46% |
Peru | $2.58 | $3.36 | 31% |
Mexico | $2.07 | $3.34 | 62% |
Hungary | $2.51 | $3.09 | 23% |
Hong Kong | $1.54 | $2.82 | 83% |
Philippines | $1.23 | $2.79 | 126% |
Taiwan | $2.25 | $2.70 | 20% |
South Africa | $1.86 | $2.58 | 39% |
Ukraine | $1.36 | $2.43 | 79% |
Malaysia | $1.33 | $2.39 | 80% |
Indonesia | $1.77 | $2.36 | 34% |
Turkey | $2.58 | $1.86 | -28% |
Russia | $1.45 | $1.74 | 20% |
Switzerland takes the cake for the priciest Big Mac, followed closely behind by Norway. Both countries have relatively high price levels but also enjoy higher wages when compared to other OECD countries.
Venezuela has seen the largest jump in burger prices, with the cost of a Big Mac climbing nearly 250% since 2004. The country has been plagued by hyperinflation for years, so it’s no surprise to see large price swings in the country’s data.
While it appears that the price of a Big Mac has decreased in Turkey, this is because the prices are shown in U.S. dollars. The new Turkish lira has depreciated against the U.S. dollar more than 90% since it was introduced in 2005.
Finally, it’s worth noting that Russia has the cheapest Big Mac, reflecting the country’s lower price levels. Labor costs in Russia are roughly a third of those in Switzerland.
The Limitations of Burgernomics
The Big Mac Index is useful for a number of reasons. Investors can use it to measure inflation over time, and compare this to official records. This can help them value bonds and other securities that are sensitive to inflation. The Big Mac Index also indicates whether a currency may be over or undervalued, and investors can place foreign exchange trades accordingly.
Of course, the index does have shortcomings. Here are some that economists have noted.
- Non-traded services can have different prices across countries. The price of a Big Mac will be influenced by the costs of things like labor, but this is not a reflection of relative currency values. The Economist now releases a GDP-adjusted version of the Big Mac Index to help address this criticism.
- McDonald’s is not in every country in the world. This means the geographic reach of the Big Mac Index has some limitations, particularly in Africa.
- The index lacks diversity. The index is made up of one item: the Big Mac. Because of this, it lacks the diversity of other economic metrics such as the Consumer Price Index.
Despite all of these limitations, the Big Mac Index does act as a good starting place for understanding purchasing power parity. Through the simplicity of burgers, complex economic theory is easier to digest.

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.
Finance
De-Dollarization: Countries Seeking Alternatives to the U.S. Dollar
The U.S. dollar is the dominant currency in the global financial system, but some countries are following the trend of de-dollarization.

De-Dollarization: Countries Seeking Alternatives to U.S. Dollar
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The U.S. dollar has dominated global trade and capital flows over many decades.
However, many nations are looking for alternatives to the greenback to reduce their dependence on the United States.
This graphic catalogs the rise of the U.S. dollar as the dominant international reserve currency, and the recent efforts by various nations to de-dollarize and reduce their dependence on the U.S. financial system.
The Dollar Dominance
The United States became, almost overnight, the leading financial power after World War I. The country entered the war only in 1917 and emerged far stronger than its European counterparts.
As a result, the dollar began to displace the pound sterling as the international reserve currency and the U.S. also became a significant recipient of wartime gold inflows.
The dollar then gained a greater role in 1944, when 44 countries signed the Bretton Woods Agreement, creating a collective international currency exchange regime pegged to the U.S. dollar which was, in turn, pegged to the price of gold.
By the late 1960s, European and Japanese exports became more competitive with U.S. exports. There was a large supply of dollars around the world, making it difficult to back dollars with gold. President Nixon ceased the direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.
Although it has remained the international reserve currency, the U.S. dollar has increasingly lost its purchasing power since then.
Russia and China’s Steps Towards De-Dollarization
Concerned about America’s dominance over the global financial system and the country’s ability to ‘weaponize’ it, other nations have been testing alternatives to reduce the dollar’s hegemony.
As the United States and other Western nations imposed economic sanctions against Russia in response to its invasion of Ukraine, Moscow and the Chinese government have been teaming up to reduce reliance on the dollar and to establish cooperation between their financial systems.
Since the invasion in 2022, the ruble-yuan trade has increased eighty-fold. Russia and Iran are also working together to launch a cryptocurrency backed by gold, according to Russian news agency Vedmosti.
In addition, central banks (especially Russia’s and China’s) have bought gold at the fastest pace since 1967 as countries move to diversify their reserves away from the dollar.
How Other Countries are Reducing Dollar Dependence
De-dollarization it’s a theme in other parts of the world:
- In recent months, Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America.
- In a conference in Singapore in January, multiple former Southeast Asian officials spoke about de-dollarization efforts underway.
- The UAE and India are in talks to use rupees to trade non-oil commodities in a shift away from the dollar, according to Reuters.
- For the first time in 48 years, Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar.
Despite these movements, few expect to see the end of the dollar’s global sovereign status anytime soon. Currently, central banks still hold about 60% of their foreign exchange reserves in dollars.
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