Purchasing power
PER-chuh-sing POW-er
/ˈpɜːrtʃəsɪŋ ˌpaʊər/
The financial ability to buy products and services.
Purchasing power refers to the amount of goods and services that can be bought with a unit of currency. It decreases during inflation and increases during deflation.
The story behind the word. This phrase combines 'purchasing' and 'power.' 'Purchase' comes from the Old French 'porchacier,' meaning 'to pursue' or 'to procure.' 'Power' comes from the Old French 'poeir,' meaning 'to be able.' So, 'purchasing power' literally means the 'ability to procure' goods and services with money, reflecting how much 'oomph' your money has in the marketplace.
Word relationships
- buying power: A more informal synonym, often used interchangeably.
- monetary value: Refers to the worth of money itself, which directly impacts purchasing power.
Commonly confused with
- Wealth: Wealth is the total sum of a person's assets; purchasing power is specifically about how much goods and services a unit of currency can buy.
Collocations
- erode purchasing power
- increase purchasing power
- decline in purchasing power
- consumer purchasing power
Example sentences
- "High inflation has significantly eroded the purchasing power of consumers, making everyday necessities harder to afford." Economic news report.
- "Saving money in a high-interest account can help protect your purchasing power against inflation." Personal finance advice.
- "A dollar had far greater purchasing power in 1950 than it does today." Historical comparison.
Memory hook
Think of your money having the 'POWER' to 'PURCHASE' things. How much power does it have? Money's buying strength
When not to use
Do not use 'purchasing power' to refer to a person's overall wealth. It specifically relates to the value of money in terms of what it can buy.
Fun facts
- The concept of purchasing power is central to understanding real wages and real income, which account for inflation.
Explore more words
Demand, Depreciation, devalue, deficit, productivity, Legal Tender
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