GDP deflator - Definition

The GDP Deflator is an economic measure that tracks the cost of goods produced in an economy relative to the purchasing power of the dollar. It measures Inflation over time, similar to the Consumer Price Index, with key differences. The formula used to calculate the deflator is as follows:

GDP Deflator = (nominal GDP/real GDP) * 100

The GDP Deflator is reported by the Bureau of Economic Analysis (BEA), using 2005 as the base year - meaning, the deflator for 2005 is set to 100 with other years reported relative to the 2005 dollar.

Unlike some price indexes (like the CPI), the GDP deflator is not based on a fixed Basket of goods and services, but changes with consumer behavior towards consumption. This makes the indicator much more dynamic in estimating the true measure of price increases.

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GDP per capita
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