Images: Shutterstock
Invented by The Economist in 1986, the Big Mac index is a rough, tongue-in-cheek measure of purchasing power parity (PPP) to make the concept more accessible to the public.
PPP..what’s that?
It’s the rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country.
Burgeronomics
Thus, the Big Mac index gauges the PPP between different currencies by comparing the price of McDonald’s Big Mac burgers, with their price in the US as a benchmark.
The Big Mac index essentially indicates by how much a currency is under- or overvalued compared to the USD.
Indian Big Mac
A Big Mac costs $6.01 in the US and ₹225.75 in India if the actual exchange rate stands at 85.82*. It suggests that INR is 56.2% undervalued.
*Data: Economist, as of July 16, 2025
Geographical limitations
McDonald’s limited geographical coverage is perhaps one of the biggest drawbacks of the index, as over 70 countries don’t have a McDonald's.
Alternatives
Big Mac index does have a few alternatives, such as the Tall Latte Index, KFC Index, Mini Mac Index, the Soup Dumpling Index, and many others.
Thanks for reading!
See next