How to judge values in a foreign destination

Travelling is easy in your own country.  Not only do you speak the language and know the local customs, but you also have a fair idea of the value of goods or services because you are buying in your own currency, so know if you are being ripped off or treated fairly.

There’s no such surety when you travel to another country, particularly when you go there for the first time.  Firstly, it doesn’t matter where you are, but whenever you buy something, you mentally try to work out how much it has cost you in your own currency. Secondly, you are not too sure of true values in the place you are visiting, so you really don’t know if you’re paying the market price or not.

Fortunately, there are a couple of methods to gauge the true price of products around the globe, and they rely on comparing the value of goods that are universally recognised – a can of Coke and a Big Mac .

The online magazine Travel & Leisure compared the prices of a can of Coke taken from the mini bars of five luxury hotels in various cities around the world.  They then worked out the exchange rate against the US dollar to calculate each Coke’s true value, and some of the results are surprising.

The most expensive city in the world in which to purchase a Coke from the mini bar is Paris, where the Coke cost $11.76.  In New York, that same Coke cost $7.10, still a rip off, but a much more benign one that Paris offered.

The cost of the Coke in other cities surveyed was $5.68 for Tokyo, $5.12 for Sydney and $4.76 in Buenos Aires.   If you travelled to South Africa for the World Cup, you can be heartened by the fact that a Coke in Cape Town will cost you just $2.63.      

Britain’s The Economist magazine has been featuring its Big Mac Index each year since 1986, which compares the price of a Big Mac in many countries around the world.  Theoretically each Big Mac should cost the same, but there are regional differences, and the real reason for publishing the Index is to show which currencies are under-valued, and which are over-valued.  By making yourself familiar with the Big Mac Index, your should be able to work out if making local purchases your trip would cost you more or less money than if you had stayed at home (discounting air fares, temporary accommodation, etc that you wouldn’t pay for at home).

According to the foreign exchange agency Oanda, in July, 2009 the price for a Big Mac in the U.S.A. was $3.57.  The most expensive Big Macs in the world can be bought in Norway, where a Big Mac cost $6.03, so I’d stick to a smorgasbord there.  Next most expensive is Switzerland, where they will cost you $5.65 – perhaps the Swiss just prefer fondues.  Some of the other places where a Big Mac will cost you more than in the U.S.A. are Iceland ($4.95), Sweden ($4.85), Denmark ($4.75), and Brazil ($4.34).

The cheapest place in the world to buy a Big Mac is Hong Kong, where it would cost you only $1.70, but why would you want to eat one there when the local cuisine is so much better than McDonalds?  Other really cheap places are Ukraine (1.74), Sri Lanka ($1.84) and China, just $1.82.

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