Function of GDP deflator: This index is also used to calculate the components of GDP, such as personal consumption expenditures. This index can more accurately reflect the trend of the general price level and is the most macroscopic measurement of the price level.

economists mostly use real GDP to explain various economic problems when conducting economic analysis. GDP deflator can more accurately reflect the trend of general price level, and it is the most macroscopic measurement of price level.

the role of p>CPI: a macroeconomic indicator that can reflect the changes in the price level of consumer goods and services generally purchased by households.

it is the relative number that measures the price level of a group of representative consumer goods and services over time in a specific period of time, and it is used to reflect the change of the price level of consumer goods and services purchased by households, which can reflect the variation coefficient of the retail price of goods and services within one month.

the relationship between GDP deflator and CPI:

the calculation basis of GDP deflator is wider than CPI, involving all goods and services, including production materials and capital, export goods and services, etc. besides consumption. It is worth pointing out that these two indexes generally change in the same direction at the same time.

the average p>GDP deflator is 1.8 times that of CPI. Generally, in the rising stage of CPI, the GDP deflator is already relatively high. When CPI reaches a high point, the increase of GDP deflator will slow down, which is related to the fact that raw material prices first rise and then transmit to CPI.

Extended information:

Differences between GDP deflator and CPI:

1. GDP deflator reflects the prices of all goods and services produced in China, while CPI reflects the prices of all goods and services purchased by consumers. For example, the price of an explosion-proof car made in China for the military has gone up, and the price in the GDP deflator has gone up, but the CPI has not gone up because it does not belong to the goods and services purchased by ordinary consumers.

the GDP deflator only includes domestically produced products, and imports are not part of GDP, nor are they reflected in the GDP deflator. But imports affect CPI.

2. In terms of weighting. CPI is a relatively fixed basket of goods and services, and the Statistics Bureau only occasionally changes the composition of this basket of goods. In contrast, the GDP deflator is a comparison between the prices of goods and services produced within a limited period of time and those of the same goods and services for several years, and the combination of goods and services automatically changes with time.

3. GDP deflator = nominal GDP/ real GDP. It is used to reflect the changes in the overall price level in the economy. And CPI measures the prices of products and services purchased by consumers, and measures a fixed basket of consumer goods.

References:

Baidu Encyclopedia-Consumer Price Index

Baidu Encyclopedia -GDP deflator.