14 June, 2005

big macs, wages and choco pies

The Economist has revised its popular, although not to be taken too seriously, Big Mac index. As well as pointing to a 59% undervalued renminbi, it notes the euro has some room to fall.:

Our annual Big Mac index (see table) suggests they have a case: the euro is overvalued by 17% against the dollar. How come? The euro is worth about $1.22 on the foreign-exchange markets. A Big Mac costs €2.92, on average, in the euro zone and $3.06 in the United States. The rate needed to equalise the burger’s price in the two regions is just $1.05. To patrons of McDonald’s, at least, the single currency is overpriced.

Meanwhile, Simon and CSR Asia are developing an alternative index that also considers wages.:

The Economist reckons you can tell a lot about exchange rates by buying a Big Mac. Simon World and CSR Asia think buying one can tell you more and are combining to update my old Alternative Big Mac Index based on the number of hours a McDonald’s employee must work to be able to buy a Big Mac. The Economist has just released its latest Big Mac Index,
so we’re calling on bloggers of the world to unite and provide us with
three bits of information to keep up with msm’s attempts at economic
analysis

Meanwhile, another competing index emerges (via the Flea).:

The Flea will engage in some journalism with a visit to the big Korean grocery store down the way. South Korean food producer, Orion has released a Choco Pie index meant to emulate the Economist’s Big Mac index meant to evaluate currencies through relative purchasing power. A Canadian price comparison seems in order. Choco Pie is reportedly wildly popular in mainland China "where a box of Choco Pies is presented as a gift to well-wishers at weddings" and adding up to an impressive 60% of the Chinese cookie market.

by @ 8:01 am. Filed under Food and Drink, South Korea, Blogs, China, Money, Hong Kong, Economy, Northeast Asia, Southeast Asia

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