How this calculator works
The GDP deflator is the ratio of nominal GDP, measured at current prices, to real GDP, measured at the prices of a chosen base year. It is an implicit index: it is recovered from the two spending totals rather than from a separate basket, so its coverage changes with what the economy produces. A value of 100 means prices equal those in the base year. The deflator is broader than the consumer price index because it covers investment, government purchases and exports, but it excludes imports and does not track a household shopping basket.
Formula
GDP deflator = nominal GDP / real GDP × 100. Rearranged, nominal GDP = real GDP × deflator / 100 and real GDP = nominal GDP / deflator × 100. The index uses a base year value of 100 and is not a percentage change.
Worked example
Nominal GDP of $1,900 with real GDP of $1,500 gives a deflator of 126.6667. That means prices are 26.6667% above their base-year level on the deflator's coverage.
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Frequently asked questions
Which year is the base year?
It is the year the statistical agency sets to 100, and it is revised periodically. Any reading must be compared with another from the same vintage, because rebasing changes the level of every index value.
Is the deflator the same as the CPI?
No. The CPI tracks a household basket including imports, while the deflator covers all domestically produced final output and updates its weights as production changes.
Why is the deflator above 100 in the example?
Prices rose after the base year, so a dollar of after-base-year output buys a smaller volume of goods. An index below 100 would indicate deflation relative to the base year.