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.
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.
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.
As at July 2018:
Six most expensive (July 18, 2018) This statistic shows the most expensive places to buy a Big Mac
- Switzerland – $6.57 (6.50 CHF)
- Sweden – $5.83 (51.00 SEK)
- United States – $5.51 (5.51 USD)
- Norway – $5.22 (42 NOK)
- Canada – $5.08 (6.65 CAD)
- Euro area – $4.75 (4.56 EUR)
Six cheapest (July 18, 2018) This statistic shows the least expensive places to buy a Big Mac
- Egypt – $1.75 (31.37 EGP)
- Ukraine – $1.91 (50 UAH)
- Russia – $2.09 (130 RUB)
- Malaysia – $2.10 (8.45 MYR)
- Indonesia – $2.19 (31,500 IDR)
- Taiwan – $2.27 (69 TWD)
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.
- Hong Kong – 8.6 min
- Luxembourg – 10.3 min
- Japan, Tokyo – 10.4 min
- Switzerland, Zurich – 10.6 min
- United States, Miami – 10.7 min
- Switzerland, Geneva – 10.8 min
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.
- Kenya, Nairobi – 172.6 min
- Philippines, Manila – 87.5 min
- Mexico, Mexico City – 78.4 min
- Indonesia, Jakarta – 66.7 min
- Egypt, Cairo – 62.5 min
- Ukraine, Kyiv – 54.7 min
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…
Last an oldie but goldie….
(yet another) sign spotted in a local pharmacy window by eagle eyed Alex, SGM-FX Head of Compliance:
Viagra- it may not make you James Bond but it will certainly make you Roger Moore.
Such a professional that Alex!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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