Israel Rises to Second Most Expensive Big Mac Price Worldwide, Behind Switzerland
The Economist's latest Big Mac Index, published on Friday, ranks Israel as the country with the second highest Big Mac price globally, just after Switzerland. This marks a significant jump from Israel's eighth place in the previous ranking released in January 2024. The index compares the price of a Big Mac at McDonald's across various countries, reflecting purchasing power parity and currency strength.
The sharp rise in Israel's ranking is attributed to two main factors: a 15% price increase of the Big Mac by McDonald's Israel in February 2024, raising the price from 20 to 23 shekels, and the strengthening of the Israeli shekel against the US dollar. In January 2024, the Big Mac cost 20 shekels, equivalent to about $6.36, indicating the shekel was overvalued by roughly 4%. After the price hike and currency appreciation, the price rose to approximately $7.40, surpassing countries like Norway, Denmark, and Sweden.
The Big Mac Index, created by The Economist in 1986, serves as a lighthearted yet insightful measure of purchasing power parity by comparing the price of a standardized product sold worldwide. The Big Mac's price reflects various local economic factors including wages, rent, utilities, transportation, advertising, and taxes. The Economist collects price data directly from McDonald's or local correspondents and uses exchange rates from Reuters and Refinitiv.
Israel's high ranking is not unprecedented; it was third in 1997 and 1998 but was excluded from the index after 2002 following government objections about its relevance. At that time, the Big Mac price in Israel was much lower, around 12.9 shekels or $2.84, far from the current top-tier position.
The Economist also highlights broader currency valuation disparities, criticizing China's weak yuan for export advantages and the US's large deficits. For Israel, the index reflects both the strong shekel and rising local prices, especially in food sectors, but should be viewed as an indicator rather than a definitive measure of overall living costs. The ranking underscores the intertwined story of currency strength and consumer prices rather than the full picture of Israel's cost of living.
