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<\/figure>\n\n\n\nWhat is GDP Deflator?<\/strong><\/h1>\n\n\n\nGDP (Gross Domestic Product) Deflator is defined as the \u201cmeasure of the level of prices of all new, domestically produced, final goods and services in an economy in a year\u201d [Source]<\/a>. It can be explained as a \u201cmeasure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year\u201d [Source]<\/a>. <\/p>\n\n\n\nGDP is the \u201ctotal monetary value of all final goods and services produced within the territory of a country over a particular period of time (quarterly or annually).\u201d The GDP Deflator measures price inflation or deflation in a specific base year. It is calculated by dividing the nominal GDP by the Real GDP \u00d7 100. Nominal GDP measures a country\u2019s gross domestic product using the current price without adjusting them for inflation, and Real GDP measures a country\u2019s economic output after adjusting to the impact of inflation. It is called the deflator because \u201cit\u2019s also the percentage you have to subtract from nominal GDP to get real GDP.\u201d<\/p>\n\n\n\n
GDP deflator vs. <\/strong>CPI<\/h1>\n\n\n\nGDP Deflator or an implicit price deflator is an \u201cindicator of the impact of inflation on GDP in an economy, or it merely notes the price changes in an economy in one year\u201d [Source]<\/a>. CPI (Consumer Price Index) is a \u201cprice index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time\u201d [Source]<\/a>. <\/p>\n\n\n\nGDP Deflator focuses only on domestic goods and excludes imported commodities. This differs from CPI, which tends to factor in anything bought by consumers, including foreign goods or services. Another difference between GDP Deflator and CPI is that GDP Deflator measures the prices of all goods and services while CPI tends to measure goods only bought by consumers [Source]<\/a>.<\/p>\n\n\n\nThe GDP Deflator measures an ever-changing basket of commodities, but CPI focuses on indicating the price of a fixed representative basket [Source]<\/a>. Also, GDP Deflator frequently changes weights, and CPI is revised very infrequently. <\/p>\n\n\n\nHow to calculate Inflation based on GDP deflator<\/strong><\/h1>\n\n\n\n
GDP is the \u201ctotal monetary value of all final goods and services produced within the territory of a country over a particular period of time (quarterly or annually).\u201d The GDP Deflator measures price inflation or deflation in a specific base year. It is calculated by dividing the nominal GDP by the Real GDP \u00d7 100. Nominal GDP measures a country\u2019s gross domestic product using the current price without adjusting them for inflation, and Real GDP measures a country\u2019s economic output after adjusting to the impact of inflation. It is called the deflator because \u201cit\u2019s also the percentage you have to subtract from nominal GDP to get real GDP.\u201d<\/p>\n\n\n\n
GDP deflator vs. <\/strong>CPI<\/h1>\n\n\n\nGDP Deflator or an implicit price deflator is an \u201cindicator of the impact of inflation on GDP in an economy, or it merely notes the price changes in an economy in one year\u201d [Source]<\/a>. CPI (Consumer Price Index) is a \u201cprice index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time\u201d [Source]<\/a>. <\/p>\n\n\n\nGDP Deflator focuses only on domestic goods and excludes imported commodities. This differs from CPI, which tends to factor in anything bought by consumers, including foreign goods or services. Another difference between GDP Deflator and CPI is that GDP Deflator measures the prices of all goods and services while CPI tends to measure goods only bought by consumers [Source]<\/a>.<\/p>\n\n\n\nThe GDP Deflator measures an ever-changing basket of commodities, but CPI focuses on indicating the price of a fixed representative basket [Source]<\/a>. Also, GDP Deflator frequently changes weights, and CPI is revised very infrequently. <\/p>\n\n\n\nHow to calculate Inflation based on GDP deflator<\/strong><\/h1>\n\n\n\n
GDP Deflator focuses only on domestic goods and excludes imported commodities. This differs from CPI, which tends to factor in anything bought by consumers, including foreign goods or services. Another difference between GDP Deflator and CPI is that GDP Deflator measures the prices of all goods and services while CPI tends to measure goods only bought by consumers [Source]<\/a>.<\/p>\n\n\n\n The GDP Deflator measures an ever-changing basket of commodities, but CPI focuses on indicating the price of a fixed representative basket [Source]<\/a>. Also, GDP Deflator frequently changes weights, and CPI is revised very infrequently. <\/p>\n\n\n\nHow to calculate Inflation based on GDP deflator<\/strong><\/h1>\n\n\n\n