Underprice This

by Andrew Stuttaford

Speaking of Argentina, Marginal Revolution’s Tyler Cowen passes on this (so to speak) nugget:

“En Argentina, ¡el precio del Big Mac subió casi el doble que el IPC oficial! Mientras el IPC oficial aumentó en 10% en 2010, el precio del Big Mac aumentó en 19%.”

In other words, the real price of the Big Mac rose nearly twice as much as the official statistics were willing to admit, in Argentina of course.  That’s not right, so the government sprang into action.  The minister of the commerce department “persuaded” McDonald’s to price the Big Mac at A$16, while other sandwiches at the chain are in the A$21 to A$23 range. The outlets now keep the Big Mac well-hidden…

The back story to this is that Argentine inflation stands officially at around 10 percent. The real number is around 25 percent, but economists who point this out have been fined, an approach not entirely distinct from the proposal (shelved for now) by the EU’s internal “markets” commissioner that under certain circumstances ratings agencies should be prohibited from writing what they think about embattled sovereign borrowers.

That the Eurozone now appears to be taking lessons from Argentina’s President Kirchner is not encouraging.