Beyond the realm of foreign exchange markets, the Big Mac Index also serves as a useful (if imperfect) lens through which to examine the cost of living across economies.

A Big Mac is a standardised good, produced with similar ingredients and labour costs across many countries. If a Big Mac costs significantly more in one country than another, adjusting for exchange rates, it suggests that the cost of goods and services may also be higher in that market.

Take Switzerland, where a Big Mac costs about $7.99 in USD terms, among the most expensive in the world. This reflects Switzerland’s strong currency, high wages, and elevated living costs. Conversely, in emerging markets such as Egypt, the same burger costs roughly $2.68 in USD terms, reflecting a weaker Egyptian pound and lower wage levels. Whilst this discrepancy partly stems from exchange rate misalignments, it also speaks to real differences in purchasing power and affordability.

The index also highlights disparities within economic unions. The Euro area, for instance, is a single currency zone, but a Big Mac costs significantly more in France than in Portugal, reflecting variations in labour costs, taxation, and rent. Similarly, within the United States, where the national average hovers around ~$5.70 in USD terms, the price of a Big Mac also varies by state, with California charging nearly a dollar more than Mississippi, due to differences in minimum wages and operating expenses.

Australia, where a Big Mac costs $4.87 in US dollar terms, appears slightly undervalued against the USD according to the January 2025 index. This suggests that the Australian dollar is trading below what purchasing power parity would imply. The price differential also reflects the fact that Australia has relatively high input costs by global standards: labour, energy, and rent. For international observers, this positions Australia as marginally cheaper than its economic peers, but not markedly so when adjusted for local wages and living standards.

Clearly, while the index is a useful starting point, it is far from a perfect gauge of overall cost of living pressures. It skews toward urban centres, where McDonald’s outlets are concentrated, and does not fully capture broader expenditure patterns. Housing, healthcare, and education (often the largest household expenses) are absent from the calculation. In Switzerland, for example, high Big Mac prices are accompanied by expensive rents, but in Japan (where a Big Mac is relatively cheap by developed market standards) other living costs, such as utilities and transportation are rising.

Nevertheless, the Big Mac Index offers a snapshot of global currency valuations and, by extension, hints at relative affordability. While economists may prefer more sophisticated purchasing power parity models, the humble burger remains a surprisingly useful tool. For those seeking an informal guide to global affordability, one need look no further than the golden arches.