(2.1) OECD Purchasing Power Parity Index

The OECD purchasing power parity compares consumption prices in different countries.

CountryPrice level (USA = 100)CountryPrice level (USA = 100)
Australia157Korea80
Austria111Luxembourg124
Belgium117Mexico64
Canada127Netherlands111
Chile73New Zealand126
Czech Republic80Norway160
Denmark149Poland59
Estonia84Portugal99
Finland127Slovak Republic76
France115Slovenia90
Germany107Spain103
Greece100Sweden128
Hungary70Switzerland174
Iceland118Turkey56
Ireland125United Kingdom132
Israel117United States100
Italy99
Japan149

source: [OECD August 2, 2012]

Critique:

  • The index includes both tradable and non-tradable goods. Non-tradable goods must be more expensive in richer countries, because they are not exposed to global competition. Therefore, the difference between poorer and richer countries is accentuated.
  • The OECD basket uses the same weights per category applied to all countries, even if the consumption basket in a richer country is different. For example the category food is 11% in Switzerland and 34% in China.

back to Purchasing Power Parity.

George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
See more for FX Theory

Permanent link to this article: https://snbchf.com/fx-theory/purchasing-power-parity/oecd/

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.