Believe it, or not – the cost of living in SA is amongst the lowest in the world
The average shopping basket in South Africa differs from the average shopping basket in, say, France.
It is, therefore, hard to compare the cost of living between countries.
A Big Mac, however, is a Big Mac whether you’re in Parys or Paris.
That’s why The Economist magazine’s “Big Mac Index” has become a (somewhat flippant) way to compare prices (and the cost of living) between countries.
Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.The Economist
Despite the above disclaimer, the Big Mac Index is a relatively accurate indicator of purchasing power because it must consider local costs of inputs such as materials, labour, taxes, rentals, etc.
If Big Macs were the only things we consumed, South Africa would be the seventh cheapest country in the world (scroll right down for the video).
Kieno Kammies interviewed Certified Financial Planner Paul Roelofse about what the Big Mac Index can tell us about our cost of living and currency.
Listen to the interview in the audio below (and scroll down for quotes from it).
Switzerland has the most expensive Big Mac… it cost $6.80 (R100.65) … In the US it costs $5.30 (R78.43) … In South Africa, it’s only $2.40 (R35.52) ...Paul Roelofse, Certified Financial Planner
Our rand is probably undervalued by about 45%...Paul Roelofse, Certified Financial Planner
Prices of properties [are inexpensive compared to most everywhere else] …Paul Roelofse, Certified Financial Planner
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