About

Exchange rates tell only half the story. If 1 USD equals 150 JPY, that is a banking reality, but it does not describe what that money buys at a grocery store or rental market. Purchasing Power Parity (PPP) adjusts for these price level differences. It answers the question: "How much local currency do I need in Country B to buy the exact same basket of goods and services I afford in Country A?"

This tool uses comparative price level indices (referenced to the World Bank and OECD datasets). It allows remote workers, expats, and HR departments to calculate fair compensation adjustments when moving across borders. It prevents the "Nomad Illusion" - where a high nominal salary in a weak currency country might actually result in lower purchasing power if local inflation or import costs are high.

Formulas

The equivalent salary is calculated by adjusting the source amount by the ratio of the Price Level Indices (PLI) of the two countries:

S_target = S_source × PLI_targetPLI_source × FX_rate

This tool simplifies the calculation using a direct PPP Conversion Factor derived from the PLI:

PurchasingPower ≈ Local Cost IndexUSA Cost Index

Reference Data

Country	Currency	Price Level Index (USA=100)	Implied PPP (approx)
Switzerland	CHF	160.2	High Cost
United States	USD	100.0	Baseline
Germany	EUR	88.1	Moderate
Japan	JPY	82.5	Moderate
India	INR	23.4	Low Cost

Frequently Asked Questions

Conceptually, yes. The Big Mac Index is a simplified form of PPP that tracks a single item (a burger). This tool uses broader economic baskets including housing, energy, and services for higher accuracy.

Google uses market exchange rates (FOREX), which are driven by speculation and trade. PPP uses the cost of goods. A salary of $50k goes much further in Thailand than in New York, even if the FX rate says otherwise.

Significant shifts happen annually with inflation reports. However, drastic currency devaluations can impact purchasing power overnight.