While it is true what you say, this is still not a good price index for the country itself.
I'm Swedish and I have several classmates from college who work at IKEAs HQ at Elmhult just a 2 hour drive from here. They allow far greater freedom on the regional (ie by country) divisions to put up prices for their products because of local trends and fashions. Something that The Big Mac index is rather immune to.
Also it's a well known phenonomen how norwegians come in droves over the border to Sweden to stock up on groceries, spirits, brand clothing etc. There are entire research papers dedicated to it.
http://www.bygdeforskning.no/dynamis...ER%2003.05.pdf