Have you ever heard about the price of a Big Mac hamburger being used to gauge inflation?  The Big Mac was introduced in 1967, at a price of 45 cents. Ahh… The good old days!

The Big Mac index tracks the burger’s price across countries and highlights the staggering inflation we’re experiencing here in the US. In January 2020 the average cost of a Big Mac in the US was $4.19. Less than four years later the price has risen to an average of $6.05.  That’s an increase of over 44%.

Economic inflation impacts the cost of a Big Mac in several ways:

  1. Raw Material Costs: As inflation occurs, the prices of raw materials used to make a Big Mac (such as beef, lettuce, cheese, and bread) tend to rise. These increased costs are often passed on to consumers.
  2. Labor Costs: Inflation affects wages and salaries. When labor costs increase due to inflation, fast-food restaurants may raise menu prices to maintain profitability.
  3. Operating Expenses: Rent, utilities, and other operational expenses also tend to rise with inflation. Restaurants adjust their prices to cover these higher costs.
  4. Supply Chain Disruptions: Inflation can disrupt supply chains, leading to shortages or increased transportation costs. These factors impact the overall cost of producing and delivering a Big Mac.
  5. Consumer Demand: Inflation affects consumer purchasing power. When prices rise, people may cut back on discretionary spending, leading restaurants to adjust their pricing strategies.

These inflationary pressures reflect the broader economic environment and not just the challenges faced by businesses in maintaining profitability. Inflation is something impacting all of us across each economic sector, and we feel it in the rising costs of utilities, transportation, food, housing, and even entertainment.

If you are interested in finding out how we find ways to battle high mortgage interest rates, please contact us. If you ever need a quick gauge of economic inflation, maybe you should check the current price of a Big Mac!