Economy > Currency > Purchasing power and exchange rates > Rates of conversion > Indices of price levels: Countries Compared
DEFINITION:
PPPs are currency converters that equalise price levels between countries. The PPPs shown here have been calculated by comparing the prices in OECD countries of a common basket of about 2 500 goods and services. Countries are not required to price all the items in the common basket because some of the items may be hard to find in certain countries, but the common basket has been drawn up in such a way that each country can find prices for a wide range of the goods and services that are representative of their markets. The goods and services to be priced cover all those that enter into final expenditure – household consumption, government services, capital formation and net exports. Prices for the different items are weighted by their shares in total final expenditures to obtain the GDP PPPs shown here.
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