The McFlation Index

Inflation is creeping up around the globe, but economists disagree on the best way to measure consumer-price inflation. In many countries, ordinary folk as well as investment analysts suspect that governments are fiddling the figures for political reasons, and the true inflation rate is much higher than the officially reported one. If you find the theory of price indices hard to digest, why not rely on simple bugernomics?

The Eonomist's Big Mac Index was devised as a lighthearted gauge to whether currencies are under-or-overvalued, but it can also be used to cross-check oficial inflation rates. Consisting of food, materials, wages and rent, the McDonald's Big Mac offers a handy consumer-price basket, whose composition has hardly changed over time.

The Economist compared prices late last year with those ten years earlier in a selectin of countries. There are discrepencies between the Big Mac Index rates and the officially reported rates, but the differences aren't much and can be partially explained by food inflation being generally higher than overal inflation. The only country where it can't be explained away is Argentina, where burger inflation is at 19% vs. its officially reported rate at 10%.

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