A price index is just a level scaled so the base year reads 100, and the price change since base is simply that level minus 100. This ladder shows the mapping at common deflator readings and marks where yours lands. It is not a forecast — it only restates your computed deflator as a cumulative price move from the base period.
GDP deflator
Price level vs base year
Price change since base
90
0.90× base-year prices
-10%
95
0.95× base-year prices
-5%
100
Equal to the base year
+0%
105
1.05× base-year prices
+5%
◀ your result (105.00)
110
1.10× base-year prices
+10%
120
1.20× base-year prices
+20%
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What it calculates: GDP Deflator, Price Change Since Base.
Prices across the whole economy are 5% above the base year
The GDP deflator is nominal output divided by real output, multiplied by 100: 21,000 over 20,000 gives 105. The base year, by construction, has a deflator of exactly 100. So the 5 points above it say that producing the same real output costs 5% more than it did in the base year.
GDP Deflator = (Nominal GDP / Real GDP) × 100
It also works in reverse, which is its main practical use. Real GDP is nominal GDP divided by the deflator and multiplied by 100, so a deflator lets you strip inflation out of any nominal series. That conversion is what turns a headline growth figure into something meaningful about actual production.
One covers everything produced; the other covers what consumers buy
The consumer price index tracks a fixed basket of household purchases, including imports. The deflator covers every good and service produced domestically — consumer goods, capital equipment, government services, exports — and excludes imports entirely. They are answering different questions and routinely differ by a point or more.
The difference is informative rather than a discrepancy. A country whose import prices spike sees the CPI rise while the deflator barely moves, because imports are not domestic production. An investment boom that raises equipment prices shows in the deflator and not in the CPI. When the two diverge sharply, the gap usually names which part of the economy the price pressure is coming from.
A fixed basket drifts out of date; the deflator never does
The CPI weights a basket that is updated only periodically, so it can overstate inflation when consumers substitute away from goods whose prices rose. The deflator uses current-period quantities by construction — it is the ratio of two measures of the same actual output — so its weights update automatically every period.
That strength is also a subtlety: because the weights move, a change in the deflator mixes price changes with changes in what the economy produces. Modern national accounts use chain-weighted indices to limit the distortion, but comparing deflators across distant years is still less reliable than comparing adjacent ones.
Both figures in the same currency, and a base year you know
Nominal and real GDP must cover the same period and the same geography, and the real figure must be stated in some base year’s prices. The deflator is only interpretable if you know which base year that is: an index of 105 means nothing without it, and comparing indices built on different base years is meaningless.
Published real GDP series are usually chain-weighted rather than fixed-base, which makes the implied deflator a chain-type price index rather than a simple ratio. For most purposes the distinction is immaterial; for precise historical comparison over decades, it is not.
Frequently Asked Questions
How is the GDP deflator different from the CPI?
The CPI tracks a fixed basket of consumer goods, while the GDP deflator covers all domestically produced output and uses the current period’s actual basket. As a result the deflator captures investment, government, and export prices that the CPI ignores, and it does not include imported consumer items.
Why does the base year always show a deflator of 100?
In the base year, output is valued at base-year prices by definition, so nominal and real GDP are identical. Their ratio is 1, which becomes 100 after multiplying by 100.
Can the GDP deflator fall?
Yes. If the overall price level of domestic output declines, the deflator drops below its previous value, signalling deflation across the economy rather than for a single product.
Is the deflator an annual or quarterly measure?
It can be computed for any period for which nominal and real GDP are reported. Many countries publish both quarterly and annual deflators alongside their GDP releases.
Does the deflator include import prices?
Not directly. Because GDP measures domestic production, imports are subtracted out, so the deflator reflects the prices of goods and services produced inside the economy.
Why might the deflator and CPI tell different inflation stories?
They weight different baskets. A spike in imported energy prices can push the CPI up sharply while leaving the deflator calmer, since energy imports are not part of domestic output.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Results are estimates for planning and analysis based on the figures you enter. They are not accounting, tax, or financial advice — verify with your own records and a qualified professional before making decisions.
Published the calculator with its formula, worked example, assumptions, limitations and a bespoke guide, and added an automated formula test suite covering it.
Tested that the deflator returns exactly 100 when nominal and real output coincide, which is the base-year definition the index rests on.
Frequently Asked Questions now show on the page: 6 answers, checked in a page-by-page audit.
What the calculation assumes and where it stops now show on the page.
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