What do burger prices tell us about the reliability of official inflation figures?



MANY people suspect that some governments are fiddling their inflation figures, and that the true rate is much higher than officially reported. Economists disagree on the best way to measure consumer-price inflation, so why not rely on burgernomics? The Economist'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 official inflation rates. We have compared Big Mac prices late last year with those ten years earlier. For example, the price of a burger in China rose by an annual average of 3.7%, against the reported inflation rate of 2.3%. That discrepancy was no bigger than in America. However, burgernomics does support claims that Argentina's government is cooking the books. The gap between its average annual rate of burger inflation (19%) and its official rate (10%) is far bigger than in any other country. Its government deserves a good grilling. For more on Big Mac inflation, see article.