Purchasing power (solvency) is one of the most important economic indicators. It is inversely proportional to the amount of money needed to purchase various goods and services. In other words, purchasing power shows how much the average consumer can buy goods and services for a certain amount of money under the existing

Purchasing power parity is the ratio between two or more currencies of different currencies, which reflects their purchasing power in relation to a fixed list of goods and services. According to the theory, for a certain amount of funds, converted at the existing rate into different national currencies, in different world countries you can buy the same one, provided there are no transport restrictions and costs.

For example, if the same list of products costs 1000 rubles. in the Russian Federation and $ 70 in the USA, then the purchasing power parity will have a ratio of 1000/70 = 14.29 rubles. for 1$. This concept of forming exchange rates was adopted in the 19th century. According to this principle, a change in the exchange rate entails an automatic change in commodity prices in the same ratio. However, on the basis of the real exchange rate of money can only be calculated conditionally, because there are still many factors that affect it.

The purchasing power of the population reflects the maximum amount of goods and paid services that the average consumer, at his income level, is able to purchase for his available funds at the current price level. This indicator directly depends on the share that it is ready and can spend on purchases.

To determine the changes in the volume of goods that a consumer can buy for the same amount of money in the current year in relation to the year under study, the purchasing power index is used. It shows how the nominal and real wages of the population correlate with each other, and is the opposite of the commodity price index. = This formula allows you to quickly and easily determine the level of purchasing power and shows that it directly depends on the level of well-being and security of an individual consumer and the entire population of the country.

When purchasing power increases greatly, this leads to deflation, and in the state it is observed. In this situation, in order to balance the indicators, producers must either increase the volume of commodity production or raise product prices.

When purchasing power falls, it leads to inflation and negatively affects the economy of both an individual state and the whole world. In the future, this trend may lead to a complete depreciation of the national currency. Also, the US dollar, which is the world currency, is not immune from this. If this happens, the economies of almost all countries of the world will suffer, since almost all processes in the global financial and economic sphere are tied to the US dollar.

Lately, moans are everywhere. Like, Russia has become impoverished, and inflation is outpacing the growth of wages. That utility prices are rising faster than wages.

But on the website of Rosstat, information is collected on salaries, and most importantly, on prices for more than 500 types of goods and services, from 1995 to 2014, broken down by regions of Russia and even by months.
So, in 2004, the average salary in Russia was 6,739 rubles a month. In 2014 - 29792 rubles per month.
http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/wages/labour_costs/#
Prices for 376 types of goods and services are calculated here as of September 2004 and September 2014. Why exactly for 2004, and not for 1999 or 1995. Simply because it was during this period that the State Statistics Committee kept the most detailed statistics. Until 2004, the price register was incomparably narrower.
Then it was determined how much an average citizen of the Russian Federation could buy this or that product in September 2004 and now in September 2014. Out of 376 goods and services
The Russian got rich in 357 positions, and only in 19 did he become poorer. The average purchasing power increased by 1.81 times.

Here are 19 goods for which the Russian has become poor in 10 years.

HOW MUCH MORE (LESS) GOODS CAN A RUSSIAN BUY IN 2014 COMPARED TO 2004

1 Validol, 60 mg, 10 tablets 0.71
2 Theatres, ticket 0.71
3 Crown manufacturing, pcs. 0.73
4 Domestic filter cigarettes, pack 0.73
5 Renting residential premises in the state 0.76
6 Clinical examination of the animal, visit 0.83
7 Museums and exhibitions, ticket 0.84
8 Tailoring of women's dress, pcs. 0.85
9 Whole draft milk, l 0.86
10 Tire fitting of car wheels, pcs. 0.88
11 Liquefied gas, month per person 0.91
12 Accommodation in a student hostel, month 0.92
13 Manufacture of a removable prosthesis, prosthesis 0.97
14 Caries treatment, filling 0.98
15 Annual cost of car insurance policy 0.99
16 Network gas, month per person 0.99
17 Services for the organization and performance of work on the operation of houses ZhK, ZhSK 0.99
18 Subscription fee for radio broadcasting point, month 0.99
19 Wedding ring, gram 0.99

And here is a group of goods or services The growth of the purchasing power of the average Russian in 2004-2014

COMMUNICATION 4.73
DIGITAL 3
CARS AND MOTORCYCLES 2.83
MEDICINES AND MEDICAL PRODUCTS 2.49
HOLIDAYS ABROAD 2.4
HOUSEHOLD APPLIANCES 2.31
FABRICS AND THREADS 2.19
SHOES AND CLOTHING FOR ADULTS 2.16
SPORTS EQUIPMENT 2.16
HOUSEWARE AND MATERIALS 2.13
BEDDING 2.09
FURNITURE 1.94
WARE 1.88
OFFICE SUPPLIES 1.86
BUILDING MATERIALS 1.85
PRODUCTS 1.74
ALCOHOL AND TOBACCO 1.69
ACCESSORIES AND JEWELRY 1.64
CHILDREN'S SHOES AND CLOTHES 1.61
RESTAURANTS AND CAFE 1.56
PETROL, SPARE PARTS, AUTO MAINTENANCE 1.54
BOOKS AND NEWSPAPERS 1.54
TRANSPORT 1.52
VARIOUS SERVICES 1.5
HOTELS AND SANATORIUMS IN RUSSIA 1.41
EDUCATION 1.4
UTILITIES AND MATERIALS 1.05
MEDICAL SERVICES 1.05
THEATERS, MUSEUMS AND CINEMAS 0.96

The sharpest increase in the purchasing power of the average Russian fell on SVYAZ - 4.73 times. The ability of a Russian to talk on a mobile phone has grown especially astronomically sharply - by 19.13 times! Provision of local connection (talk) via cellular communication, 1 minute. This is the first place among all goods and services. It is not surprising because in 2004 a minute cost 5.02 rubles, then in 2014 - a ruble, and, as we have already found out, the salary increased from 7 to 30 thousand.
The price of all digital equipment has also sharply fallen and, accordingly, the purchasing power of citizens of the Russian Federation has increased by as much as 3 times.

The current traffic jams even in Orel, Kursk, which I see, are explained by the fact that cars have become (relatively since 2004) relatively cheap, especially new foreign cars. Now the average Russian can theoretically buy a foreign car "Golf class" in the basic configuration (or "C" class. Average price - 835 thousand rubles) for 2 years and 4 months, while in 2004 he would need to work for it (average price - 562 thousand rubles) for 7 years!
Oddly enough, the medicines did not survive the high price hike, so the Russian was enriched with medicines by 2.49 times.
Well, now everyone is going abroad. Not surprisingly, the purchasing power of Russians here has grown 2.4 times.

Poor growth in purchasing power
1) Communal - and here inflation almost completely gobbled up wage growth - 1.05
2) Treatment - 1.05
3) Education, which has become only slightly more accessible compared to 2004 - 1.05

Products
The population is most mad about rising food prices. And there are good reasons for this.
For example, the price of 1 liter of milk rose in September 2014 and was higher than in September 2004 by as much as 5.08 times! 57.7 rubles against 11.34. Doctor's sausage became more expensive by 3.53 times. Beef by 3.04 times.
In general, in the period 2004-2014, prices for dairy products increased 3.23 times, for meat products - 2.74 times. This is where the strongest rise in prices was observed. The only exceptions were chicken meat, which rose in price only 1.91 times.
And despite this, the growth of wages at a faster pace covered the entire food inflation, with the exception of milk.
Strange as it may seem, prices for fruits, vegetables, cereals and fruit juices have gone up a little. Bananas and oranges are no longer exotic, and juices are out of fashion.
FRUITS 2.27
JUICE-WATER 2.19
GRAINS 2
EGGS 1.95
BUTTER AND MARGARINE 1.87
VEGETABLES AND PULSES 1.87
SAUCES 1.87
GROCERY 1.84
FISH AND CAVIAR 1.76
BAKERY PRODUCTS 1.74
MEAT PRODUCTS 1.64
SWEETS 1.61
DAIRY PRODUCTS 1.42

GROWTH OF PURCHASING POWER OF RUSSIANS BY PRODUCT CATEGORIES






Many goods and services have either sunk into oblivion or become so unpopular to the point that statisticians have found it prudent not to keep records of them any longer. Video cassettes, VCRs disappeared, a lot of medicines went out of fashion, a lot of new drugs became fashionable, diesel fuel began to be sold at gas stations, many fur products, domestic perfumes went out of fashion, smartphones, tablets appeared, motorcycles with a sidecar disappeared, car radios disappeared, and so on, and the like.
It is difficult to compare digital technology. A 2014 digital camera for 10,000 rubles is incomparably superior to a 2004 camera for the same price. The same Golf-class cars are now crammed with retrofitting for the most not indulge, which was not the case in 2004. Now in cars of this level you can find navigators, and the most advanced ESP, traction control and adaptive light, windshield wipers, gearboxes and much more.





























Purchasing power reflects the ratio of the value of products and means of payment. It is directly dependent on the prices of goods, the structure of trade and the money supply in circulation.

The growth of the purchasing power of money is possible with the development of the manufacturing sector, a reduction in the amount of money in circulation and a high level of confidence in the national currency.

Due to constant price fluctuations, purchasing power in different markets can vary significantly. For convenience, analysts use purchasing power parity. To calculate it, a certain exchange rate is set, the cost of a set of goods and services is taken as a basis, and then it is calculated how much goods and services citizens of different countries can purchase for the same amount of money.

Purchasing power calculation

The purchasing power of money can be calculated in two ways:

  • Intensive. Determination of the quantity of goods that a person can buy to meet the necessary needs. We are talking about food, clothes, utility bills and travel in public transport.
  • Extensive. Calculation of the amount of goods and services that a person can afford, without taking into account his basic needs. This category includes spending on luxury goods, spending on entertainment and recreation.

When analyzing the total purchasing power, both methods of calculation are taken into account.

Purchasing power index

The purchasing power index is used to analyze the change in the volume of goods and services that can be purchased for the same amount in the current and the year under study. The following formula is used to calculate the purchasing power index:

CPI=1/ Consumer Price Index

The parameter shows the ratio between the real and nominal wages of the population, since its value reflects the change in the purchasing power of money.

Purchasing power index (general purchasing power index, IPS)- an economic indicator most often used to assess the attractiveness of one or another.

Purchasing power index shows how many goods and services can be purchased per unit of currency. Accordingly, changes IPS index indicate the dynamics of inflation in the country and the stability of the currency as a whole. The higher the prices, the lower the purchasing power of the currency, and vice versa.

Why do we need a purchasing power index?

The purchasing power index is used to analyze changes in the volume of goods and services that the population can afford to purchase for the same amount in the current year and what is being studied. This index also reflects how the nominal and real wages of the population correlate with each other. The value of the purchasing power index is the reciprocal of the price index for goods or tariffs.

The purchasing power of the money of a particular state depends on the level of wealth of one person and at the same time is an indicator of the well-being of the entire population of the country. When purchasing power begins to rise sharply, the country experiences a wave of shortages, when demand becomes greater than supply, and people, sensing the opportunity to buy more, begin to actively use it. Therefore, the growth of purchasing power is not a uniquely positive phenomenon. With a shortage, there is a desire for equilibrium, to achieve which it is necessary either to increase production volumes or raise prices. As you can imagine, increasing is much more difficult than simply raising prices, so the second option is much more common when there is a shortage.

When the purchasing power of money goes down, this, of course, also does not bring anything good with it, affecting both the economy of a separate country and the economy of the whole world. Unlike the process of increasing purchasing power, its decrease leads to inflation. And in a particularly "neglected" case, the monetary unit may simply depreciate. Then, for the same amount, the consumer will be able to purchase less goods or services. The depreciation of some world currencies will create problems for the entire world economy. So, for example, it can happen with the dollar, the world.

Every year, many developed countries conduct research using inflation statistics and price dynamics. These studies are designed to provide information that is necessary for a prompt response to possible crises in different countries of the world. Along with price statistics, there is also an indicator of the purchasing power of money.

How is the purchasing power index (formula) calculated?

The following formula is used to calculate the purchasing power index:

Its value shows the relative change in the purchasing power of money in the hands of the population. If, for example, inflation in the consumer sector was 12.5% ​​for the year (prices for consumer goods and services increased by an average of 12.5%), this means that the CPI = 1.125 and the CPI = 1/1.125 = 0.889.

The result shows that the purchasing power of money decreased by an average of 11.1%, i.e. for the same amount of money, the population will buy goods less by 11.1% than in the base period, or, in other words, maintaining an unchanged standard of living today costs 11.1% more than yesterday.