Significance: When comparing the GDP in different periods in the same region vertically, there will be some incomparable factors due to the differences in price and calculation caliber during the accounting period. Therefore, the current price cannot be directly used to calculate the growth rate of GDP. It is necessary to establish a set of index system for each industry to eliminate the differences of price and caliber factors in each industry.

The GDP deflator is also used to calculate the components of GDP, such as personal consumption expenditure. Its calculation basis is wider than CPI, and besides consumption, it also involves all goods and services, including means of production and capital, as well as exported goods and services. Therefore, the index can more accurately reflect the changing trend of the overall price level, and it is the most macroscopic measure of the price level.

If the current price is used to calculate the value of the final product and service, then the resulting GDP is called nominal GD. The word "nominal" means that the value is calculated at current prices; Economic indicators based on annual prices (currently 1996) are relatively reliable. Gross domestic product calculated at constant prices is called real gross domestic product.

Extended data:

Other related introductions of GDP deflator:

The difference between nominal GDP and real GDP is because the market prices of products and services always change in the macro-economy. In the same year, the difference between nominal GDP and real GDP reflects the influence of this price change.

Since GDP can be divided into nominal GDP and real GDP, in order to reflect the internal relationship between them, we must eliminate the influence of price changes. Therefore, the concept of GDP price adjustment index is put forward. It refers to the percentage value between nominal GDP and real GDP. Namely:

GDP deflator = nominal GDP/ real GDP* 100

Baidu encyclopedia -GDP reduction index

Baidu encyclopedia -GDP reduction index