GDP deflater

The GDP deflater is the inflation measure that is used to adjust economic growth statistics, primarily GDP. Its calculation is not greatly different from other measures of inflation, but it must measure a fuller range of costs, than, for example, a consumer price index.

The GDP deflater is not often used other than for its primary purpose of calculating a real economic growth numbers, however it is important in this context and potentially when looking at changes in the cost of production, inflation faced by businesses and other contexts where consumer price indices are too narrow.

The GDP deflater measures the price change for all domestically produced (i.e. within the national economy) good and services, including investment and business goods (unlike consumer price indices) and government services. It also includes exports and excludes imports: so currency movements alone could cause large differences between this and other indices.

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