Billy bookshelf does battle with Big Mac Index

Published: 10 Sep 09 14:03 CET
Online: http://www.thelocal.se/21998/20090910/

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Ikea’s iconic Billy bookshelf may be on its way to ousting McDonald’s Big Mac as a gauge for comparing price levels across different countries.

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Earlier this week, the Bloomberg news agency published its first Billy Bookshelf Index, comparing the listed price of the bookshelf from Ikea websites in 38 countries.

The prices in local currency were then converted to US dollars using the average exchange rate over the past month.

According to Bloomberg’s Billy Bookshelf Index, the world average price of Ikea’s popular 2 metre high white bookcase is $60.09.

The cheapest Billys can be found in the United Arab Emirates, where the bookshelf costs $47.64. Meanwhile, shoppers in Israel have to pay a whopping $103.48 for the same model.

In Sweden, where the Billy was designed and has been sold for more than 30 years, the bookcase costs $55.11, slightly below the world average.

According to Kristian Siedenburg, the reporter who compiled the data on Billy prices, the index was originally meant to be similar to the Big Mac Index published by The Economist.

For more than 20 years, The Economist has used the classic American hamburger as the basis for an index to illustrate how closely exchange rates reflect the actual cost of goods in various countries, a concept known as purchasing power parity.

The Billy Bookshelf Index, however, differs because bookcases are considered durable goods, rather than consumer goods, meaning they aren’t purchased as often.

Thus it remains unclear whether or not Bloomberg will maintain the index in years to come.

“Ikea changes its prices only once a year,” Siedenburg told The Local.

But while the Billy Index may not be as useful as the Big Mac Index for illustrating the dynamics of purchasing power parity, it still may come in handy in discussions about business competition, transport costs, and price wars, he explained.

“Why is the UK cheaper than Hungary, for example, when you consider the average salaries,” he said.