Forex / Economic Indicator

Big Mac Index

Definition

An informal measure of purchasing power parity published by The Economist since 1986, comparing the price of a McDonald's Big Mac across countries to assess whether currencies are over- or undervalued relative to the US dollar.

Example
The Big Mac Index highlights over- or undervalued currencies by comparing the local price of a Big Mac converted to USD at the current exchange rate.
Related Terms
CPI (Consumer Price Index) Interest Rate Differential Purchasing Power Parity
Frequently Asked Question
What is the Big Mac Index?
The Big Mac Index is The Economist's informal measure of PPP, using Big Mac prices worldwide to gauge currency valuation. A currency is overvalued if its Big Mac price exceeds the US price, undervalued if lower.
APA Citation
Clark, R. (2025). Big Mac Index. VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/big-mac-index
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.