If it is true that the price of a Big Mac is the best gauge of measuring a
country’s purchasing-power parity, then Israel became a whole lot more
affordable for its inhabitants overnight.
McDonald’s Israel slashed
prices on a range of products at its 160-plus branches Sunday, including the
benchmark Big Mac, which it cut from NIS 15.90 to NIS 11.90. Big Mac, Easy Mac,
McFish Royal, McNugget and Corn-on-the-cob meal deals were reduced 16 percent
from NIS 34.90 to NIS 29.90. Family meal deals were slashed by as much as
The company implemented the reductions following a price hike of up
to 40% on certain products at its 40 kosher branches during Passover. It said
the temporary price hike was introduced to compensate for the increased cost of
producing kosher-for-Passover items such as rolls made from matza
Sunday’s price cuts were planned well before Passover, a McDonald’s
spokeswoman told The Jerusalem Post. She emphasized that the move was in no way
related to negative reactions to the Passover price hike or to mass public
protests over the cost of living that took place last summer and appear likely
to resume this year.
Management made the decision to charge customers
less on specific products “in order to broaden the price range of meals” and to
make prices identical to and in some cases cheaper than can be found at
McDonald’s in most European countries, the spokeswoman said. The prices of
single items, such as the Big Mac, were reduced accordingly, she
Prices that were lowered on Sunday included: Easy Mac, from NIS
16.90 to NIS 12.90; McFish Royal, from NIS 14.90 to NIS 12.90; a serving of four
chicken McNuggets, from NIS 16.50 to NIS 12.90; a serving of nine mini
corn-on-the-cobs, from NIS 14.90 to NIS 12.90. The price of most other
individual items, including french fries, salads and desserts, remained
An Israeli Big Mac now costs the equivalent of $3.16,
according to Sunday’s shekel-dollar exchange rate.
Israel was the
13th-most expensive of 43 countries when The Economist last published its Big
Mac index on January 11.
The cost of an Israeli Big Mac was $4.13 at the
time of the survey, less than in the United States ($4.30), but more than in
many countries with far higher per capita income, including Britain ($3.82) and
Singapore ($3.75). Switzerland was the most expensive place to purchase a Big
Mac ($6.81), and India, where it is made with chicken instead of beef, the
The index is based on the theory of purchasing- power
parity; in the long run, exchange rates should adjust to equal the price of a
basket of goods and services in different countries. For example, the January
index showed that the shekel was about 2% undervalued against the US dollar at
the time. The exchange rate that would have brought the price of an Israeli Big
Mac into parity with an American one was NIS 3.79 to the dollar, while the
actual exchange rate was NIS 3.85.
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