Since 2016, however, these trends have actually reversed, helping to gradually reduce the price differential. Adding the Big Mac sauce will usually cost you a 30 cents. dollars, Switzerland has the most expensive Big Macs in the world, according to the July 2022. We can attain an implied exchange rate, or PPP, by dividing the cost of the Big Mac in Britain (using the value in pounds sterling) by the price charged in the US (in USD). In the United States, the same Big Mac cost 5.28. Usually, Consumer Price Index calculation is used to measure Inflation rate. Big Mac index worldwide 2022 Published by Statista Research Department, At 6.71 U.S. The cost for a Big Mac in Britain in 2018 was 3.19, or 4.41 if converted using the exchange rate of 0.72. Figure 3 helps unpack the story: the relative price gap of Big Macs between Germany on the one hand and France and Italy on the other actually widened from 2011 to 2016, as prices in the former remained flat and continued to rise in the latter. The best part about this is the double cheeseburger is its price rolls through at only 1.29. The Big Mac Index is simplest (but informal) way to calculate Consumer Price Index. On a brighter note, however, recent developments may be finally working in the desired direction. The International Monetary Fund made this case much more formally in its latest External Sector Report: it found an overvalued real effective exchange rate in France and Italy (by 4% and 5% respectively) and a significantly undervalued one in Germany (by 15%) for 2017. To the extent that 2011 prices captured a misalignment in real exchange rates, that misalignment persists (or has possibly been exacerbated by widening productivity differentials in the same period). Prices in France and Italy have grown (+0.70 EUR) virtually as much as prices in Germany (+0.72 EUR) (Figure 1) and faster relative to the euro area in general (Figure 2). Another point to note is that relative prices of Big Macs have not changed among the large euro-area economies.
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