Big Mac Index Shows Official CPI Underreports Inflation

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Big Mac Index

In “Better to Bank with Cyprus Than the United States?” we wrote:

In 1996 the government began measuring inflation differently, lowering the reported number significantly. … The average Big Mac costs 83.5% more.

Even though the cost of a Big Mac has risen from $2.36 to $4.33, the CPI index has only adjusted to pay $3.49 for a Big Mac leaving seniors $0.84 shy of smiling.

Big Mac CPI Index

Put another way the lack of an adequate CPI adjustments leave seniors 71 days shy of a year’s worth of lovin’ it. Seniors really deserve a break today.

If you want to eat every month of your retirement you need to guard your portfolio against government induced inflation and the lack of accurate reporting in the official statistics.

Talk to a fee-only financial planner to learn how much cash you should be holding and how to protect your portfolio’s value against inflation today.

Big Mac data from http://bigmacindex.org/bmi-data-text-format.html.

CPI data from http://www.bls.gov/cpi/.

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818…)