Israel Ranks Second Most Expensive Globally in Big Mac Index Reflecting High Food Costs

Israel ranks second only to Switzerland in the international Big Mac Index, a comparative measure of food prices published by The Economist for 40 years. The index, launched in 1986 before McDonald's entered Israel, compares the price of a Big Mac in various countries adjusted by the local exchange rate. Currently, a Big Mac costs $7.67 in Israel, compared to $6.22 in the US and just $2.42 in Taiwan. These price gaps reflect both local food cost levels and currency exchange rates against the US dollar.

The Economist notes that extreme currency appreciation or depreciation affects the dollar price of the Big Mac, with Israel serving as a recent example. Two years ago, when the dollar was about 3.8 shekels, the Big Mac was relatively cheaper in Israel, but with the shekel strengthening to 3 shekels per dollar, the dollar price of the Big Mac rose by 25%, making Tel Aviv one of the most expensive cities for this meal.

The Big Mac was chosen for this index due to its consistent composition worldwide, with labor costs accounting for 45.5% of the price, followed by bread (12%), meat (9%), rent (4.5%), and electricity (5%). Changes in any of these components influence the final consumer price, making the index a useful proxy for local living costs.

Israel's high ranking in food price indices is not limited to McDonald's meals. Deutsche Bank's 2025 grocery price comparison ranks Tel Aviv 11th among major global cities, and OECD and IMF data place Israel second in overall cost of living after Switzerland. In 2005, Israel was ranked 21st among developed countries for cost of living, indicating a significant increase since then.

Research by Dr. Sarit Menachem-Karmi from Reichman University shows that Israel's food basket prices were relatively low compared to five wealthy European countries until 2009 but have since risen 27% above their average. Factors contributing to this rise include kosher certification costs, VAT, bureaucratic trade barriers, and national economic policies under the government during this period.