Farmgate: A Quick Index to Assess Inflation

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With all the talk of inflation and rising prices, especially in the food industry, it’s no wonder people feel like their dollar isn’t stretching as far as it used to – and they are right.

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The question remains is it only here in Canada, or is it worldwide? And how do you measure different countries and their currencies against the Canadian dollar?

Well, welcome to the Big Mac Index!

First published in The Economist in September 1986 by Pam Woodall, this is an exercise in measuring purchasing power parity (PPP) between currencies, and therefore countries. The original report was somewhat ironic, but it has taken its entire life and is published annually, with country prices converted to US dollars for comparison. He even coined his own name, “burgernomics!”

The Big Mac, the main star of the McDonald’s restaurant chain, was a good measuring stick. Available now in over 100 countries, it is available at all levels of society and is popular around the world. McDonald’s reports that it sells over 560 million Big Mac burgers a year! Popular is right!

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The latest study taken from average burger prices in July 2021 shows that we weren’t so badly off compared to last year.

Switzerland offered the most expensive Big Mac, at US$7.04. Next is Norway where it would take US$6.30 to satisfy your craving. Sweden was third with US$6.20.

Fourth was our southern neighbor at US$5.65. Canada was close behind with US$5.31.

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Israel is next at $5.16, followed by Uruguay at $5.11 and the Eurozone at $5.02.

Australia is next at US$4.79 with New Zealand hot on its heels at US$4.76 and Britain at US$4.75.

This is followed by Denmark at US$4.74, Brazil at $4.36 and Singapore at US$4.31.

Last but not least is Russia at US$4.16, although given the current situation this may have changed significantly.

While this study shows that the purchasing power of our dollar wasn’t as bad as it looked last year, if you’re a McDonald’s fan and planning a vacation so you can eat the same food, no matter where you travel, this study could also be very useful as a guide on where to go to spend as little as possible on food. Well, maybe choose a country that is one or two steps from the bottom of the list!

To get a full understanding of how it works and the theory and math behind the numbers, search for “Big Mac Index” on Wikipedia.

About Sharon Joseph

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