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%.