Hyperinflation: Dollar Devaluation Measured By Big Mac Index

The Economist’s Big Mac Index is widely respected as a measure of currency valuation. Typically it is used to compare across countries. But it can also be used across time. Here, we take a look at how a 2012 dollar compares with a 1986 dollar.

In 1986 you could buy a Big Mac with $1.60. Today it takes $4.20. The 2012 dollar has the same buying power as 38 cents from 1986. That works out to a roughly 5% average inflation rate over the past 26 years. And inflation does appear to be accelerating.

Read more about the Big Mac Index on Wikipedia and the recent blog post by Peter Schiff about Big Macs and inflation.