Real value

Updated: Aug 20, 2021

In general, the term ‘real’, as used to describe value or price, refers to value excluding fluctuations brought about by inflation or deflation. It is mostly used in making comparisons over a period when prices have reacted to arbitrary and artificial pressures which do not reflect genuine worth. This concept is very important in published figures, e.g. profits, dividends, wages, etc., when it is necessary to restate current figures in terms of prices ruling at the time when the figures with which they are being compared were compiled. This is done by applying an appropriate index number. Real value may also be applied to money itself, e.g. the real value of a 1985-pound sterling may be only 50 pence at 1977 prices.

Reference: The Penguin Business Dictionary , 3rd edt.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.