Definition: Relative price levels

Category: Purchasing power parities

These are defined as the ratios of specific PPPs (Purchasing power parities) to the corresponding overall PPP for GDP (Gross domestic product). They indicate whether the price level for a given aggregation level or analytical category is higher or lower relative to the general price level in the country. They facilitate the comparison of price structures across countries. To be meaningful relative price levels should be based on PPPs that have been calculated using an aggregation method that is additive (2012 Methodological manual on purchasing power parities).

These are defined as the ratios of specific PPPs to the corresponding overall PPP for GDP. They indicate whether the price level for a given basic heading or aggregate is higher or lower relative to the general price level in the country. They facilitate the comparison of price structures across countries. Strictly speaking, relative price levels should based on PPPs that have been calculated using an aggregation method that is additive (2005 Methodological manual on purchasing power parities). http://ec.europa.eu/eurostat/product?code=KS-RA-12-023&mode=view Eurostat and Organization for Economic Cooperation and Development (OECD), "Eurostat - OECD Methodological manual on purchasing power parities (2005 Edition)", Methods and Nomenclatures, Office for Official Publications of the European Communities, Luxembourg, 2006European Union, Regulation (EC) No 1445/2007 establishing rules for the provision of basic information on PPPs, Official Journal of the European Union No L 336, 20.12.2007, p. 1 - 24