As a college student who has only worked for nonprofits, I don’t have particularly deep pockets. Simply put, I’m broke. But I’m not hungry, thanks to the shockingly cheap McDonald’s breakfast-burrito meal, which includes two sausage burritos, a hash brown, and a small coffee. In midtown Manhattan, the price for this scrumptious and nutritious — I’m not a nutritionist; I’m a writer — breakfast is only $5.65.
Considering the rising cost of groceries and restaurant food, the cheapness of McDonald’s got me thinking: Has the breakfast burrito meal always been this cheap? Was it significantly cheaper before the pandemic? In general, is “McFlation” less than consumer price index (CPI) and personal consumption expenditure (PCE) inflation?
(Yes, these are rather nerdy thoughts to entertain while inhaling a breakfast burrito. No, I’m not apologizing.)
I used the Economist’s Big Mac index to approximate general “McFlation” — i.e., the inflation of the McDonald’s menu. A Big Mac cost $4.82 in January 2020 and $5.36 as of December 2022, yielding average compounded yearly inflation of 3.60 percent. Referring to the St. Louis Fed’s PCE time series data, I calculated inflation to be 7.07 percent a year between 2020 to 2023. McFlation is less than half of PCE inflation.
As a robustness check, I compared McFlation to CPI inflation. Using data from the Bureau of Labor Statistics, I compute 5.06 percent yearly inflation from 2020 to 2023. McFlation is 1.46 percentage points lower than CPI inflation.
McDonald’s is preserving the purchasing power, wealth, and health of the American working class — and of broke college students like me. So much for so-called “greedflation.”
Thank you, McCapitalism.