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Purchasing power parities, 2017 and 2018

Released: 2019-04-26

In 2018, the purchasing power of a Canadian dollar was US$0.83, down for the second consecutive year. It declined 0.2% in 2018, following a 0.7% decline in 2017. A purchasing power parity (PPP) of US$0.83 indicates that the equivalent goods and services bought by CAN$100 in Canada would require US$83 to purchase in the United States.

PPP measures are more relevant for international comparisons than market exchange rates, which can be subject to short-term fluctuations unrelated to domestic purchasing power.

Chart 1  Chart 1: Purchasing power parities: United States compared with Canada
Purchasing power parities: United States compared with Canada

US economy 11 times larger than Canada's

In 2018, the nominal gross domestic product (GDP) of Canada and the United States was CAN$2.2 trillion and US$20.5 trillion, respectively. The PPP-adjusted Canadian GDP was US$1.85 trillion, around one-eleventh the size of the USGDP. In 2018, PPP-adjusted per-capita national income in Canada was US$49,900, compared with US$62,600 in the United States.

Goods relatively more expensive in Canada, services less expensive

In 2018, the PPP of goods and services was US$0.77 and US$0.89, respectively. Goods that are more expensive in Canada than in the United States include food, alcoholic and non-alcoholic beverages, and tobacco products.

Health and education services, which are more subsidized in Canada than in the United States, are relatively cheaper in Canada. In 2018, the PPP of health services was US$0.94, while the PPP of education services was US$1.11.

  Note to readers

Estimates of purchasing power parities (PPPs) reflect the relative prices of all products included in the gross domestic product of each country, consequently PPPs are relatively stable. The exchange rates, on the other hand, are more volatile. In addition to prices of traded products, currencies' demand and supply are influenced by factors such as currency speculation, interest rates, and capital flows between countries. Therefore, PPP is a better metric of the relative purchasing power of incomes between two nations.

Multilateral PPPs are estimated by the Organisation for Economic Cooperation and Development to enable such comparisons across member nations. Statistics Canada applies real gross domestic income (GDI) weights, which capture impacts of changes in terms of trade. A detailed explanation of the concepts and methods applied to calculate PPP is available in the article "Purchasing Power Parities between the United States and Canada: concepts and methods," which is part of Income and Expenditure Accounts Technical Series (Catalogue number13-604-M).

Products

The article "Purchasing Power Parities between the United States and Canada: concepts and methods," which is part of Income and Expenditure Accounts Technical Series (Catalogue number13-604-M) is now available.

The Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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