Purchasing power measures the value of goods that can be bought with a specific amount of a currency. Purchasing power is a relative measure that is most relevant when analyzed for changes over time.
if a dollar is valuable enough to buy five apples for one dollar at a point in time, and one dollar can only buy four apples a year later, then the dollar’s purchasing power will have decreased over the year.
Prices Changes due to Inflation and Deflation
Inflation is the number-one enemy of economy-wide purchasing power. Inflation is the process whereby prices slowly rise throughout all sectors in an economy, effectively reducing the purchasing power of fixed assets and current income levels. According to Investopedia, inflation is neither inherently good nor bad. It is an ever-present reality that must be counterbalanced by increases in wages, interest rates and other factors over time.
Using online pricing database Numbeo, GOBankingRates.com ranked nations by four key affordability metrics. Each metric is measured against what you would find in New York City:
Local purchasing power index: Measures the relative purchasing power of a typical salary in that country. A lower purchasing power buys fewer goods, while a higher purchasing power buys more.
Rent index: Includes typical rental prices in the country.
Groceries index: Includes typical grocery prices in the country.
Consumer price index: Includes costs of local goods and services — including restaurants, groceries, transportation and utilities.
List of 5 Cheapest Countries to live
1 Saudi Arabia
Local purchasing power is 38.05% higher
Rent is 85.64% cheaper
Groceries are 59.46% cheaper
Local goods and services are 51.63% cheaper
Saudi Arabia is one of the most important and influential nations of the Arab world. This Middle Eastern nation is prospering thanks to its strong oil industry centered on crude oil, petroleum refining and petrochemicals. Its population of 28.7 million primarily speak Arabic. Unfortunately for American retirees, Saudi Arabia is also known for its attachment to a puritan version of Sunni Islam that embraces brutal punishments and severe restrictions on women’s dress and activities.
2 Belize
Local purchasing power is 34.33% higher
Rent is 88.65% cheaper
Groceries are 50.65% cheaper
Local goods and services are 44.2% cheaper
Once named British Honduras, Belize has a superb location and low cost of living, making it one of the cheapest countries to retire to. It reclines beside the Caribbean Sea and shares a border with Guatemala. Tourists flock to Belize for its beaches, reefs, wildlife and Mayan ruins. Best of all, English is the official language and, just off the coast of Belize, is Caye Caulker, a premiere but cheap island getaway.
3 Libya
Local purchasing power is 32.65% higher
Rent is 81.2% cheaper
Groceries are 52.99% cheaper
Local goods and services are 54.15% cheaper
Libya has abundant supplies of sand, sun and oil. It was the oil — discovered just after the country gained its independence — that brought Libya immense riches. Libya is also known for the four-decade rule of Col. Muammar Gaddafi, who seized power in 1969 and held onto it until 2011, when he fell in an armed rebellion. About 6.4 million people live in this Arabic speaking nation.
4 Oman
Local purchasing power is 11.86% higher
Rent is 72.08% cheaper
Groceries are 50.66% cheaper
Local goods and services are 47.41% cheaper
Located on the southeastern coast of the Arabian Peninsula, Oman has a long and beautiful shoreline on the Arabian Sea. This proximity to the sea has allowed Oman to develop a fishing industry and contributes to the rise of tourism in this country. Visitors appreciate the rich geographic diversity, with its mountains, deserts and ocean. But the real economic backbone of the nation is oil. The country is Islamic, and the population of almost 3 million speak Arabic.
5 Zambia
Local purchasing power is 10.07% higher
Rent is 78.06% cheaper
Groceries are 66.17% cheaper
Local goods and services are 55.27% cheaper
Zambia is one of the most stable countries in Africa. Landlocked, Zambia shares a border with Zimbabwe and Namibia in south-central Africa. Its population is growing fast. Currently home to over 13 million people, Zambia is projected to have a population nearing 40 million by 2050. Zambians designated English as their official language, which should ease communication if you decide to move here.
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