Monday, January 27, 2014

My take on the Big Mac Index---the Big Mac Inflation Index. Am I onto something???

The Economist is out with its latest update on the Big Mac Index.  It is a playful illustration of the exchange rates and Purchasing Power Parity given just one commodity--McDonald's Big Mac.  Find out more about it HERE.

When I looked at the historical data available with the index I noticed in some countries the price of a Big Mac had changed quite a bit.

So I took the posted prices in the countries own currency from January 2012 (3rd column) and January 2014 (2nd column) and calculated the percent change in price of Big Mac (4th column).

The numbers are in descending order, from highest to lowest change in price.

I highlighted in RED the countries where the percentage price change was higher than the world wide average change in price of 9.28%.

Here is an assignment for you.  Check a few of the countries ACTUAL inflation rates and see how they correlate to the change in prices of Big Macs.   Maybe we have discovered a new fun measure of inflation---The Big Mac Inflation Index.  Just  send me some royalties. That's all I ask for.  :)

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