FinancialEdge: Buying Power Around The World

Anyone who has traveled outside of North America has likely noticed that prices can be very different around the world. What are luxuries in some countries are relatively common in others and vice versa. Price is a central mechanism in economics as it represents the place where suppliers and consumers do business, so it is interesting to explore these differences and the factors that shape them. (If you want to take advantage of the increase in consumer prices, check out A Guide To Investing In Consumer Staples.)

Same Foods, Very Different Prices 

Food is a good proxy for some of the differences in prices between countries, as everybody eats and an egg is an egg wherever one may roam. While The Economist has long used its Big Mac Index as a means of measuring purchasing power parity (PPP) between countries, the Big Mac is simply one particular food item. It is interesting, then to explore some of the other discrepancies. 

Ground beef sells for about $3 a pound in much of the U.S., but nearly $6 in Australia and $11.50 in Taiwan. While the latter makes sense (there aren't large herds of cattle wandering Taiwan), Australia is a bit surprising with its ranching culture. Sticking with fruits of the bovine, milk retails for about $2.25 in the U.S., but only 70 cents in India and a little over a dollar in Brazil and South Africa. Curiously, milk in Hong Kong retails for about $2, while the price in Taiwan is more than twice as high.

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