BigMac is one of the most famous McDonald's hamburgers, being marketed since 1968 and until today it is one of the best sellers by the company. Due to this popularity, in 1986 the British magazine The Economist created the BigMac Index, or BigMac Index, which basically makes a comparison between the prices of this hamburger in different countries and the purchasing power from them. Read this article and find out what the BigMac index is.
This index, although informal, serves as an indicator for Purchasing Power Parity (PPP), which reflects the cost of living in countries. Thus, it is possible to compare the purchasing power of a given location based on the famous hamburger, since McDonald's is operating in almost the entire world.
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Furthermore, this index has the advantage that the product is marketed in a standardized way, that is, its ingredients are practically the same in all countries.
How it works
The index uses the BigMac price in dollars from its home country as a base.
Thus, having this value as a reference, it is possible to investigate how depreciated or appreciated a currency is in relation to the dollar (Exchange rate).
As this index focuses on PPC analysis, it ensures understanding of a country's consumption and productivity patterns using the unique value of the hamburger.
The survey of BigMac prices is carried out in more than 59 countries and occurs every six months.
See this index in some countries
In the United States, the BigMac is sold at U$5.65 according to the last survey done in July of that year.
In Brazil, the value reached R$22.90 with an exchange rate considered to be U$5.25 per dollar. As a result, the index showed an undervaluation of our currency by 22.8% against the US dollar.
In Venezuela, the country with the highest sale price for this hamburger, it costs U$8.35 (R$46.17). Thus, it presents a devaluation of its currency of 47% in relation to the American currency.
Lebanon is the country where the BigMac is sold the cheapest: just US$1.77. However, he is at the top of the currency undervaluation index (68.70%), because in local standards it is a very high value since the country is experiencing an economic crisis aggravated by the pandemic.
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