Okuzeka
Economics vocabulary · Inflation and Prices

Purchasing power

Meaning in economics, with examples

nounCore term

In economics, purchasing power means: The amount of goods and services that a sum of money or an income can buy; it falls when prices rise faster than incomes.

In Turkish: satın alma gücü, alım gücü

How it is used

Common in news about inflation and wages: inflation erodes or eats into purchasing power, and pay rises aim to protect or restore it. Economists also compare countries using purchasing power parity (PPP), which adjusts for different price levels.

Example sentences

  1. High inflation has eroded the purchasing power of pensions.

  2. Measured at purchasing power parity, the country's income per person is much higher than at market exchange rates.

Common collocations

  • erode purchasing power
  • loss of purchasing power
  • purchasing power parity
  • protect purchasing power
  • inflationA general and continuing rise in the prices of goods and services in an economy, which means each unit of money buys less over time.
  • cost of livingThe amount of money people need to pay for basic needs such as housing, food, transport and energy in a particular place and time.
  • in real termsMeasured after removing the effect of inflation, so that a figure shows the true change in what money can buy.
  • wageThe money a worker is paid for their work, especially when it is calculated by the hour, day or week.

More terms: Inflation and Prices

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This page explains English vocabulary for learners. It is not financial advice.