In economics, the
GDP deflator (implicit price deflator) is a measure
of the level of prices of all new, domestically produced, final goods
and services in an economy.
GDP stands for gross domestic product, the
total value of all final goods and services produced within that
economy during a specified period.
Like the consumer price index (CPI), the
GDP deflator is a measure of
price inflation/deflation with respect to a specific base year; the
GDP deflator of the base year itself is equal to 100. Unlike the CPI,
GDP deflator is not based on a fixed basket of goods and services;
the "basket" for the
GDP deflator is allowed to change from year to
year with people's consumption and investment patterns.
1.1 Measurement in national accounts
1.5 United Kingdom
1.10 Hong Kong
2 See also
4 External links
Measurement in national accounts
In most systems of national accounts the
GDP deflator measures the
ratio of nominal (or current-price)
GDP to the real (or chain volume)
measure of GDP. The formula used to calculate the deflator is:
GDP deflator = frac operatorname
Nominal GDP operatorname
Real GDP times 100
GDP of a given year is computed using that year's prices,
while the real
GDP of that year is computed using the base year's
The formula implies that dividing the nominal
GDP by the
and multiplying it by 100 will give the real GDP, hence "deflating"
GDP into a real measure.
It is often useful to consider implicit price deflators for certain
subcategories of GDP, such as computer hardware. In this case, it is
useful to think of the price deflator as the ratio of the current-year
price of a good to its price in some base year. The price in the base
year is normalized to 100. For example, for computer hardware, we
could define a "unit" to be a computer with a specific level of
processing power, memory, hard drive space and so on. A price deflator
of 200 means that the current-year price of this computing power is
twice its base-year price - price inflation. A price deflator of 50
means that the current-year price is half the base year price - price
deflation. This can lead to a situation where official statistics
reflect a drop in prices, even though they have stayed the same.
Unlike some price indices (like the CPI), the
GDP deflator is not
based on a fixed basket of goods and services. The basket is allowed
to change with people's consumption and investment patterns.
Specifically, for the
GDP deflator, the "basket" in each year is the
set of all goods that were produced domestically, weighted by the
market value of the total consumption of each good. Therefore, new
expenditure patterns are allowed to show up in the deflator as people
respond to changing prices. The theory behind this approach is that
GDP deflator reflects up to date expenditure patterns. For
instance, if the price of chicken increases relative to the price of
beef, it is claimed that people will likely spend more money on beef
as a substitute for chicken.
In practice, the difference between the deflator and a price index
Consumer price index
Consumer price index (CPI) is often relatively small. On the
other hand, with governments in developed countries increasingly
utilizing price indexes for everything from fiscal and monetary
planning to payments to social program recipients, even small
differences between inflation measures can shift budget revenues and
expenses by millions or billions of dollars.
State Bank of Pakistan
State Bank of Pakistan reports the
GDP Deflator and the real GDP
GDP Deflator in India is reported by the Ministry of Statistics and
Programme Implementation (India).
GDP deflator are calculated by the US Bureau of Economic
GDP deflator series are published by the Office for
GDP deflator series are published by Statistics Canada.
GDP deflator are calculated by the Australian Bureau of
GDP deflator are calculated by the INDEC.
GDP deflator are calculated by the Cabinet Office (Japan).
GDP deflator series are published by the Census and
Statistics Department (Hong Kong).
GDP deflator series are published by the Central Bureau of
Chained volume series (of
Implicit Price Deflator for Personal Consumption Expenditures (IPD for
^ "Concepts and Methods of the U.S. National Income and Product
Accounts" (PDF). Bureau of Economic Analysis. July 2008.
^ "Archived copy". Archived from the original on 2009-01-17. Retrieved
^ National Statistics Online
^ Statistics Canada: Canada's national statistical agency /
Statistique Canada : Organisme statistique national du Canada
^ http://censtatd.gov.hk/hkstat/sub/so250.jsp Census and Statistics
Department: National Income
Gross Domestic Product (GDP) deflators: user guide
GDP deflator data
IMF database of country
GDP deflators for 1980-2013