Eli5: Have wages lost purchasing power and what does that mean
In: Economics
“Purchasing power” isn’t about how much you make – it’s a comparison of how much you make compared to how much things cost. If you make $200 a week, and a hamburger costs $2, then you can afford 100 hamburgers. If hamburgers go up to $5 each, but you still make $200/week, then you have lost purchasing power.
In economic, “inflation” means that prices of things are going up.
If wages don’t go up or go up slower than prices go up (not kept up with inflation), then people can’t buy as much stuff with their wages.
“Purchasing power” is how much stuff you can buy.
So they’re saying prices went up more than wages went up.
Means bread cost about $1 a year ago. Now? 2.95; call it $3. So with the money you get every month, or every paycheck, you cannot buy as many things. It costs more, so if you try to buy the same things you did a year ago, what cost 100 dollars may now cost 300 dollars. (Each item is costing more)
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