Japan’s Big Mac costs ¥500. At the July 2026 survey rate of ¥162.135 to the dollar, that’s $3.08 — against $6.22 in the United States. Japan sits 50% below the US, which puts it 48th out of the 54 markets The Economist prices.

For reference, the same sandwich runs CHF 7.30 in Switzerland — $9.04, the most expensive in the world. A Swiss Big Mac buys you nearly three Japanese ones.

Most write-ups stop at “the yen is weak” and move on. That’s true — and it’s half the story.

Two forces, not one

The gap comes from two separate things happening at once, and they’re worth keeping apart because they behave differently.

The yen fell. In early 2021 a dollar bought ¥104. Today it buys ¥162. That’s a slide of about 36% — and it happened mostly because the Bank of Japan held rates near zero while the Federal Reserve raised them hard. Money went where the yield was — nothing more complicated than that. The Bank of Japan’s own policy statements track the timeline.

The menu moved less. McDonald’s Japan took the Big Mac from ¥390 to ¥500 over five and a half years — up 28%. The current menu is public, and you can watch it inch: ¥390 held for four straight readings, then ¥410, ¥450, ¥480, and only in July 2026 did it cross ¥500. Four increases in five years, in a country where a decade of near-zero inflation trained everyone to expect none at all.

Stack those together and you get the number. The yen lost 36% of its dollar value; the price tag rose 28% in yen. What’s left over — eight points and change — is the discount a dollar-holder sees. That gap is narrower than it was two years ago, and it is still closing.

Neither force alone would have done it. If McDonald’s Japan had raised prices to keep pace with the currency, the Big Mac would be around ¥605 today and the “cheap Japan” story would be much duller.

The arithmetic the index actually runs

The Big Mac Index isn’t a price comparison. It’s an exchange-rate argument dressed as one.

Divide the Japanese price by the American one: ¥500 ÷ $6.22 = ¥80.4 per dollar. That’s the rate at which a Big Mac would cost the same in both countries — burger parity.

The market is trading at ¥162.135. The gap between 80.4 and 162.135 is where the “50% undervalued” figure comes from. The Economist has published this calculation twice a year since 1986, and it has always been half-joke, half-serious.

Serious, because over long stretches currencies do drift toward parity. Joke, because a Big Mac isn’t traded across borders. Nobody arbitrages sandwiches — you can’t ship one. Rent, wages, and local competition are all baked into that ¥500, and none of them cross an ocean.

So a 50% gap doesn’t mean the yen is 50% too cheap and will snap back. It means the basket of things that go into a Japanese Big Mac — labour, rent, beef, a franchisee’s margin — is priced far below the American equivalent. Some of that is currency. Some of it is that Japan is genuinely a cheaper place to run a restaurant.

Cheap for whom, exactly

Here’s the part that gets skipped.

A Big Mac is cheap in Japan if you earn dollars. If you earn yen it costs ¥500, and ¥500 is ¥500 — the exchange rate never enters your day.

Japan’s national weighted-average minimum wage is ¥1,121 an hour (Ministry of Health, Labour and Welfare, revised annually each October — the FY2026 guideline raises it again, to ¥1,176). So a Big Mac is roughly 27 minutes of minimum-wage work.

Run the same calculation in the US at the federal minimum of $7.25: $6.22 is about 51 minutes.

By that measure Japan’s Big Mac is the more affordable of the two for the person buying it locally — and the gap is nothing like 50%. The headline discount is a fact about the dollar, not a fact about Japanese living standards.

This is the single most common misreading of the index — and it resurfaces every time the yen slides. “Japan is so cheap now” is a sentence about the speaker’s currency.

What it means if you’re going

For a visitor holding dollars, euros, or Swiss francs, the maths is real and it compounds. A ¥1,500 lunch is under $10. A ¥12,000 business hotel is under $80.

Two caveats worth carrying:

The discount is on non-traded things — meals, rooms, trains, haircuts. Anything imported gets re-priced at the same exchange rate you’re benefiting from — the discount cancels itself. Electronics in Akihabara are not the bargain the 1990s guidebooks promised.

And it can reverse fast. Currency moves are not a feature of a destination — they’re a feature of the pair. Anyone who booked Japan on the 2012 rate of ¥78 to the dollar remembers the other direction. We tracked how this plays out across the region in Asia’s dollar strength and what it buys in 2026.

What I’m not confident about

Two things.

The minimum-wage comparison above is a blunt instrument. US states set their own floors, and most are well above the federal $7.25 — so the American side of that comparison flatters Japan. Using California’s rate would narrow the gap considerably. I used the federal number because it’s the one figure that isn’t a choice among fifty, not because it’s the most representative.

And the “cheaper place to run a restaurant” claim is directional, not measured. Comparing commercial rent, franchise fees, and beef procurement between Tokyo and Chicago properly would take a different article and better data than I have. OECD’s purchasing power parity series is the serious version of what the burger gestures at, and it puts Japan’s overall price level below the US too — just not by 50%.

The number to actually watch

Not the price. The price is sticky by design — McDonald’s Japan has spent a decade avoiding increases, and that’s a business decision, not an economic signal.

Watch the spread between ¥80.4 and the market rate. If the Bank of Japan keeps normalising and the gap closes to, say, ¥120, the Big Mac will still cost ¥500 and Japan will have quietly become 35% more expensive for you, with nothing on the menu having changed.

Current figures for every market we track are on the Japan country page, and how we get the numbers is written out in full.