Big Mac Index: Argentina More Expensive Than U.S.
Click on Image to EnlargeOuch! Those grinning days of inexpensive indulgence are gone. As most of you already know, Argentina is no longer the beacon of cheap that it used to be. Inflation has eaten away at the country’s comparative currency advantage, raising the cost of living for natives and foreigners alike. The latest price point to take a hit: the Big Mac.
According to The Economist’s Big Mac Index, it is now more expensive to buy a Big Mac in Argentina than in the U.S. This is not news to any of you who have seen prices at McDonald’s lately, but it is interesting that the change has been formally noted. The average cost of a Big Mac in Argentina now totals U.S. $3.64, compared with $3.57 in the U.S., according to the index.
In 2003 a Big Mac in Argentina cost just $1.18 (ah, the Golden Days) while in the U.S. it cost $2.65. Inflation has pushed costs up just about everywhere. The average Big Mac in Argentina now costs a whopping 36% more than a year ago.
As explained by The Economist:
The Big Mac Index is based on the theory of purchasing-power parity (PPP), which says that exchange rates should move to make the price of a basket of goods the same in each country. Our basket contains just a single item, a Big Mac hamburger, but one that is sold around the world. The exchange rate that leaves a Big Mac costing the same in dollars everywhere is our fair-value yardstick.
Of course, the Big Mac Index is in no way an exhaustive survey of purchasing power parity. It ignores a huge range of products and services whose costs carry greater weight in daily living than do lard-laden hamburgers. Argentina’s energy prices are among the cheapest in the world (most households pay under a peso a day for electricity). Public transportation is exceptionally inexpensive. Taxis, too, despite recent price hikes, are nowhere near as expensive as they are in U.S. and European cities. Meanwhile, there are few places on the planet where you can get a perfectly cooked Fillet Mignon or Rib-Eye for what they cost in Argentina. None if this is pondered in the Big Mac Index.
A Big Mac in Brazil costs $4.73 while in Chile it goes for $3.13, and in Uruguay just $2.55 (surely this does not include Punta del Este in January).
Link: Video Explaining The Big Mac Index
Link: Bloomberg Compilation of Big Mac Index Data
Popularity: 1% [?]
Test Comment
That’s exactly why I have moved back to Florida.
exactly why I eat Choripan.
3 pesos.
chimichuri is free.
All the stuff you`re mentioning that is cheap here has to do with services. Al the exportable goods here in Argentina (Drugs, Coca-Cola, Unilever products, etc. etc.) is more expensive than in europe. Services are so cheap because they are not exportable. That is why one not want to become a service economy
saludos
Hey Penelope,
Many thanks for your feedback.
I’m not sure it’s completely that way with services.
My sense is that the least expensive services are to a large degree price-controlled, like public transportation, utilities, etc.
But I certainly see your point.
Best wishes,
Taos
Taos,
why don’t you write an article about the Housing Bubble in Buenos Aires. Prices are ridicolous here.
[...] “accesible”. Los combos salen alrededor de 25 pesos, exceptuando el Big Mac, que por ser un índice económico, esta regulado por el gobierno y su valor aproximado es de 17 pesos. Lo sorprendente de este lugar [...]