In dollars, this represents a value of $5.31 based on the official exchange rate of the day the update was made, that is, $182.84 per dollar. This implies that the hamburger costs practically the same here as in the United States, where it is available at $5.36. In neighboring Brazil, it is worth 19.6% less. “If Argentina and Brazil formed a monetary union at the current exchange rate, Argentina would find itself at a great competitive disadvantage. It would be almost 20% more expensive than its bigger neighbor, at least judging by the burger prices,” he remarked.
The Economist article highlights the case of Argentina because, although the value of the peso fell sharply against the dollar, real economy prices measured by INDEC rose even more.
“Its price is indicative of broader inflationary pressures. And, because the hamburger is basically the same anywhere in the world, its price can also reveal how inflation has changed the relative cost of different countries”, he explained. However, the analysis is distorted since it adjusts to the official exchange rate and not to the parallel ones.
That is, the Argentine peso would be “undervalued” by 1% against the US dollar and the implicit exchange rate should be $182.84. But if the same exercise were done with the MEP price ($352), the cost would drop to US$2.78, one of the lowest in the world.
By comparison, a Big Mac costs $5.36 in the United States, an increase of more than 6% in the past two years.. “The combination of rising prices and a rising currency threatens to throw US prices out of balance relative to other parts of the world. Two years ago, for example, the Big Mac was 26% cheaper in Japan than in the United States. At first, this suggests that the yen was undervalued and should have rallied against the dollar. In fact, the opposite occurred. A Big Mac is now 40% cheaper in Japan,” The Economist added.
In search of the cheapest hamburger, India ranks first, with $2.53which would indicate that the currency is undervalued. Instead, the most expensive product is found in Switzerland, at $7.26.
Source: Ambito
