Real wages fell brutally: Big Mac index plummeting in Hungary

Hungary has been struggling with EU-record inflation in the past few months, especially considering food prices, resulting in a significant decrease in real wages. Food inflation has been extremely high, 50-100% between 2022 and 2023. That is what the so-called Big Mac index also highlights. It was years ago that a Hungarian average salary was worth this low number of BM menus.

According to portfolio.hu, a Hungarian economy-focused new outlet, between 2005 and 2022, the price increase of a Big Mac menu was much below the average food price inflation in Hungary. It was even a bit below the general inflation, too. The difference between the menu’s price and the inflation rate broadened in 2022, but the former reached the latter in 2023. Probably because of a conscious business policy decision.

Between 2009 and 2022, the number of Big Mac menus an average Hungarian could buy increased significantly and continuously. In 2009, you could buy 110 medium menus from an average Hungarian net salary. That number rose to 205 by 2022.

However, the opposite of 2022 was the year 2023, when every negative trend reached in Hungary. Therefore, György Surányi, a former president of the Hungarian National Bank, believes the two years should be considered as one unit.

In the case of the Big Mac medium menu, prices did not follow the inflation until October 2022. That means it was worth buying the menu in summer 2022 because average wages rose, but the menu’s price remained almost unchanged. However, McDonald’s began to increase the menu’s price drastically. In 2022, the average food price inflation was 23.3%, while the menu price increased only by 6.15% in Hungary. The reverse trend ruled 2023. You had to pay 20.3% more for a Big Mac menu, while the average food price rise was only 2.3%.

Wages back at the 2018 level in Hungary

As a result, the number of menus you could buy from an average Hungarian net salary brutally fell. In February 2022, it was at a peak of 235. That came after the government transferred much money to the people before the general elections. The money transfers included the 13th-month pension and the tax refunds to families raising children.

After February, the trend reversed and by August 2023, an average Hungarian wage was worth only 167 McDonald’s Big Mac menus. That is a bit above the 2018 number, which might mean the purchasing power of the Hungarian salaries fell back 4-5 years. We wrote about that in detail HERE.

According to The Economist’s Big Mac index, the Hungarian forint was 28.5% underrated to the US dollar. We wrote HERE that the Hungarian currency broke a psychological barrier on Friday.

In THIS article, you may read about foodora’s big announcement considering their delivery prices in Hungary.