Israel has the world's second most expensive Big Mac
The latest Big Mac Index ranks Israel behind only Switzerland, while suggesting the shekel remains nearly 40% overvalued against the dollar.
Israel ranks second in The Economist's Big Mac Index, which is celebrating its 40th anniversary. The index compares purchasing power across countries by measuring the price of a McDonald's Big Mac. Published since 1986, it uses the price of a Big Mac in the United States as a benchmark to assess whether currencies are undervalued or overvalued relative to the U.S. dollar.
According to the latest index, the average price of a Big Mac in the U.S. is $6.22, while in Israel it costs the equivalent of $7.67, making it the second most expensive Big Mac in the world, after Switzerland, where it costs $9.04.
Despite the higher dollar price, The Economist argues that both the Swiss franc and the Israeli shekel remain overvalued against the dollar based on purchasing power parity. In Switzerland, converting the U.S. Big Mac price of $6.22 into Swiss francs yields about 5.02 francs, which is enough to buy only around 70% of a Big Mac. Based on this comparison, the magazine estimates that the Swiss franc is overvalued by about 45% against the dollar. The Israeli shekel is similarly estimated to be overvalued by nearly 40%.
Rounding out the top five most expensive markets are the United Kingdom, where a Big Mac costs $7.40, the euro area at $7.08, and Turkey at $6.91.
At the other end of the ranking, Indonesia has the cheapest Big Mac at $2.38, followed by Taiwan at $2.42 and India at $2.45. At those prices, the cost of a single Big Mac in the U.S. is enough to buy roughly two and a half Big Macs in Indonesia, Taiwan, or India.
The Economist notes that Big Mac prices differ significantly between countries because of factors including tariffs, transportation costs, competition, labor expenses, rent, and electricity prices, all of which influence the final price consumers pay.
The findings are broadly consistent with a report published last month by Deutsche Bank, which found that McDonald's prices in Tel Aviv are the highest in the world.
