What does purchasing power actually measure

INSEE defines purchasing power as the quantity of goods and services that income can buy. Its change therefore depends on both disposable income and prices. If income rises less than prices, purchasing power can fall; if it rises more, it can increase.

Statistics may track all households or adjust for persons or consumption units. They describe an average or aggregate and are not designed to reproduce every household’s experience exactly.

A household spending heavily on energy, housing or food can experience a different change from the average index if those items rise faster. Owners and tenants also have different cost structures.

The same increase in total income means something different if household composition changes. Measures per consumption unit try to reflect economies of scale inside a household, producing a different view from total income alone.

Compare changes in net income with fixed and variable expenses over the same period. Use the national indicator for context, then your own basket to identify what is actually driving your household position.