KFC Index facts for kids
The KFC Index is a fun way to understand how much your money is worth in different countries, especially in Africa. It's like a special tool that compares the purchasing power of different currencies. Purchasing power means how many goods or services you can buy with your money.
This index is similar to the Big Mac Index, which uses the price of a Big Mac burger to compare currencies around the world. But the Big Mac Index doesn't work well for Africa because there aren't many McDonald's restaurants there. Instead, the KFC Index uses the price of a KFC bucket of chicken! KFC has restaurants in almost 20 African countries, making it a better choice for this comparison.
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How the KFC Index Works
The KFC Index helps us see if a country's money is "stronger" or "weaker" than it should be, compared to another currency like the US dollar. Imagine a KFC bucket costs $10 in the United States. If the same bucket costs the equivalent of $15 in another country, that country's currency might be overvalued. This means your money doesn't go as far there.
On the other hand, if the same bucket costs the equivalent of only $5 in another country, that country's currency might be undervalued. This means your money can buy more there. The index uses the price of a standard KFC bucket to make these comparisons across different African nations.
What the Numbers Showed in 2016
In February 2016, the KFC Index showed some interesting facts about African currencies:
Countries with Overvalued Currencies
These countries had currencies that were considered "too strong" compared to what they should be based on KFC prices. This means a KFC bucket was more expensive there than in the US, after converting the money.
Countries with Undervalued Currencies
These countries had currencies that were considered "too weak." This means a KFC bucket was cheaper there than in the US, after converting the money. Your money could buy more in these places.
South Africa -48% undervalued
Egypt -34% undervalued
Namibia -32% undervalued
Images for kids
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How many KFC buckets can you purchase for $100
