PPP in the UK

Purchasing Power Parity (PPP) in the UK is an economic theory that compares the value of currencies based on their purchasing power. It suggests that in different countries, the same goods should cost the same when converted to a common currency. For example, if a basket of goods costs £100 in the UK, it should cost the equivalent in another country’s currency. PPP helps economists assess whether a currency is undervalued or overvalued and enables comparisons of living standards and economic productivity between countries. It is a useful tool for understanding real economic conditions beyond just currency exchange rates.