Burgernomics is by far the best indicator of how we’re faring

Sinead Ryan

A McDonald's burger is at the centre of the Big Mac Index, which was created by 'The Economist' magazine

August 03 2022 02:30 AM

Anyone paying their electricity bill or shopping for groceries doesn’t need to be taught about inflation. Nor do they need the relentless economic analysis to hammer home the effect of what Ronald Reagan called the “violent mugger – as deadly as a hitman”.

There are myriad economic indices that predict and project everything from house prices to exchange rates based on complicated mathematics. Many of them ‘track’ an imaginary basket of goods. Most are dreadfully dull; not for nothing is economics known as the dismal science.

But the one I refer to, rooted in the real world of people’s lives rather than egghead ivory towers, is the Big Mac Index.

Created by no less august a journal than The Economist, it tracks the price of the ubiquitous burger across the globe, offering a prosaic indicator of purchasing power which, after all, is what matters to most of us far more than high-falutin’ equity markets and oil futures.

Given McDonald’s presence – 38,000 restaurants in more than 100 countries at the last count – it’s a fairly robust, if light-hearted way of measuring economic success. So, we find in the latest index that Switzerland, with its robust, wealthy, under-the-radar economy, charges $6.71 (€6.57) for the popular double patty. At the poorer end, the unctuous treat costs just $2.28 in Romania and $1.76 in Venezuela, although that could well have changed between writing and print, or even morning and evening, given that latter country’s roller-coaster inflation rate of anything from 167pc to 3,000pc.

Burgernomics isn’t a precise art form, but then again, formal economic modelling has proved to be not much better, so which of us is to state the more accurate model? And this way, you can eat the results, so it’s a win-win situation.

When you consider the process of combining meat, cheese slices, bread, various sauces and what are loosely termed salad items, it combines labour costs, raw material manufacturing, importation charges and tax, not to mention the ratio between average earnings and expenditure on food.

It’s a short leap to compare market exchange rates and determine whether a currency is over- or under-valued compared with that other ubiquitous marker, the US dollar.

So news that McDonald’s, after 14 years of stagflation, is upping the price of some of its menu items may come as a shock to the boffins.

It’s not just the Big Mac. In an alarming revelation, the Chicken Mayo, McNuggets and even the McFlurry will all succumb to the ravages of biting inflation, and it’s the gorging fatties who will take the biggest hit.

In what may be a sinister social experiment, the company said wraps and salads would remain untouched – by price hike or customers, it would seem.

Economists will spend sleepless nights mainlining McCoffees while they can still expense them amid coloured graphs and (apple) pie charts while agonising over the Millionaire’s Donut, and then advise customers to take their business elsewhere.

Burgernomics is by far the best indicator of how we’re faring

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