Overview - Purchasing power parities

Purchasing Power Parities - Overview

Introduction

Image PPP

What are purchasing power parities?

Purchasing power parities (PPPs) are indicators of price level differences across countries. They indicate how many currency units a particular quantity of goods and services costs in different countries. 

PPPs can be used as currency conversion rates to convert expenditures expressed in national currencies into an artificial common currency (the Purchasing Power Standard, PPS), thus eliminating the effect of price level differences across countries. 

What information can I find here?

This domain comprises annual data on:

  • Purchasing power parities (PPPs);
  • Price level indices (PLIs); 
  • Expenditures (nominal, real, volume indices);
  • Convergence indicators. 

For more detailed information, including revisions, please see the page 'Information on data' in this section.

For which countries are data available?

Data are available for 36 countries: the 27 EU Member States, three member states of the European Free Trade Association (EFTA), five candidate countries and one potential candidate country. Data are also available for the United Kingdom until 2020.

For what purpose are these data used?

The 2 main purposes are:

  • To convert national accounts aggregates into comparable volume aggregates. In particular, PPPs can be used to compare the Gross Domestic Product (GDP) of different countries without the figures being distorted by differing price levels in those countries.
  • To analyse relative price levels across countries. For this purpose, the PPPs are divided by the current nominal exchange rate to obtain a price level index (PLI) which expresses the price level of a given country relative to others.
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