Purchasing Power Parity and the Big Mac Index
More about Purchasing Power Parity or PPP which we wrote about last week: the old benchmark which best describes this measurement was started by the Economist newspaper in 1986 and monitors a basket of shopping containing just one item: the cost of a Big Mac in the world’s different countries.
Â
The idea is that the USA represents parity and therefore the other countries are either expensive or cheap versus parity. As we all know, life is not exactly not like that and Big Macs do not revert to the mean ie Switzerland has consistently been one if not the most expensive country in the world. Nor is it likely any time soon that Filipinos will earn enough in 10.7 minutes to buy themselves a Big Mac.
Â
Nevertheless it IS instructive to see the most expensive country, Switzerland at $6.57 versus the cheapest, Egypt at $1.75. Plus the fastest time to earn the cost of a Big Mac, Hong Kong at 8.6 minutes versus the longest time, Kenya at 172.6 minutes.
Â
As at July 2018:
Six most expensive (July 18, 2018) This statistic shows the most expensive places to buy a Big Mac
Six cheapest (July 18, 2018) This statistic shows the least expensive places to buy a Big Mac
Six fastest earned (July 2015) This statistic shows the average working time required to buy one Big Mac in selected cities around the world in 2015.
Six slowest earned (July 2015) This statistic shows the average working time required to buy one Big Mac in selected cities around the world in 2015.
The UK market starts the week absorbing the fact that Theresa May has promised a vote (now) by 12-03-19. Does she have a deal with Brussels within her grasp? Will Parliament vote it through?
GBP has started trading in Australia at exactly where it left off in NYC on Friday night. So far the markets are giving TM the benefit of the doubt…
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Click Here to Subscribe to the SGM-FX Newsletter
Data Day Despite salient data already having been published in China and France so far this morning, we are far from finished with the deluge of data due to reach the market today. The most important of which will be those that we have signposted in earlier briefings: Eurozone and US inflation figures. Given just […]
Eurozone That was a surprise: yesterday the EU announced that inflation had fallen to 2.4% which was considerably better than the 2.7% that markets had expected. Despite the ECB saying it was far too early to cut rates, the market has pencilled in the first cut for April. Before getting carried away it should be […]
UK Labour market The Bank of England yesterday broke cover to drive the message home that due to the UK’s labour market remaining tight, it was premature to start talking interest rate cuts and it was not just Governor Bailey who was calling for higher for longer interest rates but also his MEPC colleague Jonathan […]