It might not be as fun as eating a hamburger, but it might help you understand why they pay the price for what they do.

The peso is one of the emerging currencies that has corrected the most in value in early 2023, but government programs to reduce inflation are still not enough.īig Mac Index economist This is no more than a theoretical exercise, but it provides an opportunity to analyze the behavior of currencies and their purchasing power in different parts of the world. The Big Mac index relates the exchange rate in many countries to the. Published by Teresa Romero, Dec 8, 2022. explores the usefulness of the Big Mac index as a currency crisis indicator. Gas, electricity and fuel have become the most expensive in European countries.īecause of the direct link of exchange rates with inflation and interest rates (as part of monetary policy), purchasing power parity is not enough to determine a coin’s value, but it can provide clues.Īt the end of 2022, Mexico closed with an inflation rate of 7.82% and an exchange rate close to 19 pesos per dollar. For example, if the AUD/USD exchange rate is 0.75, this means that USD 0.75 (or 75. been popular examples of the principles of PPP and.

The rate of inflation also varies from country to country because of the economic and social context and the policies to combat the wave of inflation.įor example, in Mexico, food was the item that posted the strongest price increase.

Big mac index example with pesos