Big Mac Index

The British pound is 12.9% undervalued against the US dollar.

A Big Mac costs £3.79 in Britain and US$5.36 in the United States. The implied exchange rate is 0.71. The difference between this and the actual exchange rate, 0.81, suggests the British pound is 12.9% undervalued.

I was reminded of the Big Mac Index during a call with some of my colleagues, and this information is from The Economist’s Big Mac Index and the latest data is January 2023. You can adjust the numbers by factoring in GDP.

The Big Mac Index is a price index published since 1986 by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and providing a test of the extent to which market exchange rates result in goods costing the same in different countries. It “seeks to make exchange-rate theory a bit more digestible.” The index compares the relative price worldwide to purchase the Big Mac.

Then I remembered the Mars Bar Standard, another great product price index. What other fun ones are there?

Kevin Harrington

I’m a UK-based B2B marketing consultant, specialising in strategic advice for SME business owners. I bring extensive hands-on expertise to every client engagement. Senior leadership roles across technology, media, payments, and publishing have shaped my practical approach. Highlights include serving as Chief Marketing Officer at The Panoply plc (now TPXimpact), Chief Commercial Officer at Tungsten Network, and Global Marketing Director at BBC Worldwide. Over the years, I’ve guided numerous SMEs through transformation and value creation. Helping businesses evolve and thrive is a genuine passion. Practical marketing insights and succession planning strategies are at the heart of what I do, as I believe growing a business’s asset value should be a rewarding and positive journey for every entrepreneur.

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