Saturday, September 3, 2011

Big Mac Inflation Index, Argentina Style

As a way to compare official inflation figures with real-world prices, The Economist magazine devised the Big Mac Inflation Index. Comparing worldwide prices for McDonald's signature sandwich, the Big Mac, gives a sense of the true relative purchasing power of various currencies. In an article early this year explaining the index, The Economist pointed out that Argentina's official inflation rate was only 10% while burger prices had actually gone up twice as much, 19%.

Argentina's response to this is fascinating and fiendishly clever.

Walk into any McDonald's in Buenos Aires and look up at the big lighted menu board and you will find the usual stuff: Cuarto and Angus Tasty and McPollo and McNifica and all the rest. Look again, a little more closely, and you'll notice there is no Big Mac. No Big Mac at McDonald's? Huh?

Why isn't the Big Mac advertised on the menu? The rumor is that the Argentine government has asked (perhaps even paid?) McDonald's to keep the price of that particular item artificially low because of the inflation index. McDonald's has complied with the request but, to avoid losing money selling an item below cost, has taken the Big Mac off the published menu to discourage customers from ordering it.

We temporarily suspended our aversion to McDonald's to test this out. We walked up to Palermo to enjoy the Thays Botanical Garden; it was lunchtime and we were getting hungry, so we stopped in a McDonald's on Las Heras near the park. All the listed combo meals (sandwich, fries, and drink) ranged from A$32 to A$42 (US$7.75 to US$10). There was no Big Mac on the menu board but we asked, and sure enough they had it, at A$21.90 (US$5.25), a half to a third off the price of any other meal. We also discovered that ordering a Big Mac ensures that you get a freshly prepared burger, since they don't make them in advance and stick them under a heat lamp.

The Big Mac Inflation Index

The other big surprise was that the Big Mac was -- dare I say it? -- tasty. Burgers are hard to come by in Buenos Aires, and the Big Mac meal made a pretty good, and pretty cheap, lunch.

Here's my snapshots of this trip.


  1. What I am wondering is did the Argentines not notice the Big Mac disappearing from the menu? I'm also wondering when I last had a Big Mac. I sorta want one right now. I get to go to All You Can Eat McDonald's when I visit relatives in Arizona. Have not done that since 2006 when I had way too many McD fish burgers. I'm enjoying the vicarious trip to Argentina and Buenos Aires. Say howdy to Gail for me.

  2. Durango, I think the Argentines are like everybody else -- they look up at the big menu board and pick something. If it ain't there, they don't think of it.

    Don't forget to put on your vicarious coat -- it's cool down here, the high tomorrow is supposed to be 57°F.

    Gail says hey, and I do, too.

  3. Fascinating!! Who would think you could order "off the menu" at a fast food place?? Also, I'm intrigued by the interplay between a government wanting (paying for) a certain price of a product and a company complying, making the product effectively invisible.

  4. J, this is Argentina. As in the US, government and corporations are, um, very close.

  5. Mike:

    Love your blog. I'm just sorry I didn't notice it earlier.

    I was born in Argentina was spent the first eight years of my childhood not too far from Plaza Vicente Lopez. My parents lived on Laprida, near Juncal Street, until they left during the Alfonsín years.

    Talk about malaise! Carter and Bush have nothing on that guy's administration, let me tell you. If you're interested in reading about the engineers who really wrecked the train and got Argentina off the development track, though, check out the Wikipedia articles on [ Adolfo Diz] (the Central Bank President during most of the last dictatorship) and [é_Alfredo_Martínez_de_Hoz José Alfredo Martínez de Hoz] (the Economy Minister during the same period). Contextual differences aside, you may notice similarities between what happened to Argentine finance in the late 1970s, and what happened in the U.S. thirty years later.

    On a final note, Mike: if you ever find yourself on Laprida and Juncal (and if it's still there), try the empanadas at Pizzeria Cambalache. You may never want to go back to a BigMac again ;)

    Here's hoping you and Gail have a wonderful time in Buenos Aires.

    All the best,


  6. James, thanks for the comments and the links, glad you found the blog. Argentina has a fascinating history, and the more we go back and forth between here and the US the more parallels we see. Nowadays, for example, it's the crony capitalism.

    We'll check out Pizzeria Cambalache -- an awful lot of places brag they have the best empanadas, and I think they're all right. :-)

  7. Mike:

    Well said.

    I wanted to thank you for your Flickr post, as well. You have a real talent there. Do please consider putting some of your photos under the "some rights reserved" tag, as this would make their posting on Wikipedia or the Wikipedia Commons possible.

    Have a great trip.


  8. Thanks again, James. I had not thought of that, the rights issue on Flickr; I'll look into it.

  9. Muhammad Saleem from the website onlinemba sent along a well done and entertaining graphic about the Big Mac Inflation Index.

    The Big Mac Index