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Glossary · PSX term

Purchasing power.

Purchasing power is how much your money can actually buy.

Definition

Inflation erodes purchasing power over time, so the same rupees buy fewer goods each year. Investing aims to preserve and grow purchasing power rather than just nominal rupees.

Worked example

If prices rise 20% in a year, Rs. 100 buys noticeably less than it did twelve months earlier.

Related on PSX Clarity

Term
Inflation
Term
Real return
Term
Consumer Price Index (CPI)

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