It’s been a while since this blog noted a Big Mac Index from the Economist. A couple of years, in fact.
Here’s the latest Big Mac Index to make up for it [click to enlarge], which shows the movement in the index from 2007 to 2012. The Economist define their index as,
“based on the theory of purchasing-power parity, which says that exchange rates should eventually adjust to make the price of a basket of goods the same in each country. Our basket contains just one item: the Big Mac hamburger. It works by calculating the exchange rate that would leave a Big Mac costing the same in each country.”
The Index shows that Sterling and the Euro have both lost value against the Dollar.