Purchasing power refers to the quantity of goods, services, or assets that a unit of currency can buy at a given point in time — a measure of the real value of money in terms of what it can purchase in the economy. Purchasing power is eroded by inflation: as the price level rises, each rupee buys fewer goods and services, reducing the real wealth of savers and fixed-income recipients. Purchasing Power Parity (PPP) is an international economic concept comparing the purchasing power of different currencies by equalising the prices of an identical basket of goods across countries — used for comparing standards of living and economic productivity across nations. For investors on Ventura Securities, preserving and growing purchasing power is the fundamental objective of investing — the real return on an investment (nominal return minus inflation) determines whether wealth is actually growing in real terms. Fixed deposits yielding 6% when CPI inflation is 6% generate zero real return, making equity and inflation-linked instruments essential for long-term purchasing power preservation and wealth creation.
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