PPP Calculator (Purchasing Power Parity)
Enter the price of an identical basket of goods in two countries to find the implied purchasing power parity exchange rate.
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Enter the basket price in each country to see the PPP exchange rate.
Worked example
With these example inputs:
- Basket price, country A$100
- Basket price, country B$80
PPP exchange rate: 1.25
- The other way round0.80
- If the first figure were 10% higher1.38
Frequently asked questions
How is purchasing power parity calculated?
Divide the price of the same basket in country A by its price in country B. If a basket costs 100 in A and 80 in B, the PPP rate is 1.25 units of A per unit of B.
Why does PPP differ from market rates?
Market exchange rates move with trade, capital flows and sentiment, while PPP reflects only relative prices. Gaps between the two hint at whether a currency looks over or undervalued.