‘The Falafel Index’ Shows Overvalued Israeli Shekel

falafel

For many years, “The Big Mac Index” has given economists an informal yet useful way to compare currencies around the world, by looking at the relative price of McDonald’s signature burger in those countries.

But what to do in the Middle East, where McDonald’s is almost a luxury item? Turn to the ubiquitous falafel, of course. Recently, Forbes released the first real compilation of the Falafel Index–and it shows that Israelis are shelling out more for the staple than their regional counterparts, even taking into consideration the nation’s economic conditions.

Ten US dollars will buy just two falafel sandwiches in Haifa and Tel-Aviv, where prices average about $4.50 a pita. Low prices can be seen in many of the less developed and even war-torn areas, like Cairo ($1.57), Baghdad ($0.86), and Gaza ($0.58).

However, falafel prices are also lower in nearby nations where monthly GDP greatly outpaces that of Israel, like oil-rich Dubai, UAE ($3.27), Doha, Qatar ($2.47), and Riyadh, Saudi Arabia ($1.87).

Forbes notes that in addition to an overvalued currency, Israel has struggled with food prices in recent years:

“Since 2005, food prices in Israel have increased more than in any other developed country. Currently, they are 19 percent higher than other Organization for Economic Co-operation and Development (OECD) countries, and 25 percent higher than Europe. The Kedmi Committee (colloquially referred to as the “food committee”), formed after massive protests in 2011, mainly blamed lack of competition for price hikes in food and consumer goods…”

If it’s any consolation to the Israelis, their American brethren recently suffered a devastating increase in falafel price.

 

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