Purchasing Power Parity (PPP)
Purchasing power parity is an exchange rate that equalises the cost of the same basket of goods in different countries, used to compare prices more fairly than market exchange rates.
What is Purchasing Power Parity (PPP)?
Regulators sometimes use PPP rates to compare telecoms charges between countries. PPP rates make developing countries' currencies look much more valuable than market rates do, which can make their prices appear far higher. PPP is imperfect because of transport costs, tax differences, tariffs, non-traded inputs such as labour, and market power.