Calculate the inflation rate based on changes in the GDP price deflator.
Base/Previous Deflator:100.0
Current Deflator:105.2
Deflator Change:+5.2
Inflation Rate:5.20%
Understanding the GDP Deflator Inflation Rate
The GDP Deflator (Gross Domestic Product Implicit Price Deflator) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy. Unlike the Consumer Price Index (CPI), which measures a fixed basket of goods bought by consumers, the GDP deflator measures price changes in all components of GDP, including investment goods, government spending, and exports.
How to Calculate Inflation using GDP Deflator
To calculate the inflation rate between two periods using the GDP deflator, you compare the index value of the current period against the index value of a previous period (or base year). The result represents the percentage change in the general price level.
For example, if the GDP Deflator was 110 last year and is 115.5 this year, the inflation calculation would be:
Difference: 115.5 – 110 = 5.5
Ratio: 5.5 / 110 = 0.05
Percentage: 0.05 × 100 = 5% Inflation Rate
GDP Deflator vs. CPI
While both metrics track inflation, they have key differences:
Scope: GDP Deflator covers all domestic production; CPI covers consumer purchases only.
Imports: CPI includes prices of imported consumption goods; GDP Deflator excludes imports.
Basket: CPI uses a fixed basket of goods; GDP Deflator's "basket" changes automatically as consumption and investment patterns shift.
Calculating the Deflator from GDP
If you do not have the deflator values yet, you can calculate the GDP Deflator index itself if you know the Nominal GDP and Real GDP for a specific year.
GDP Deflator = (Nominal GDP / Real GDP) × 100
Nominal GDP is the market value of goods and services produced in an economy, unadjusted for inflation. Real GDP is nominal GDP adjusted for inflation to reflect changes in real output.
function calculateGDPInflation() {
// 1. Get input values by ID
var prevDeflatorInput = document.getElementById("prevDeflator").value;
var currDeflatorInput = document.getElementById("currDeflator").value;
var resultBox = document.getElementById("resultsArea");
// 2. Validate inputs
if (prevDeflatorInput === "" || currDeflatorInput === "") {
alert("Please enter both the Previous and Current GDP Deflator values.");
return;
}
var prev = parseFloat(prevDeflatorInput);
var curr = parseFloat(currDeflatorInput);
// 3. Handle edge cases (zero division or non-numbers)
if (isNaN(prev) || isNaN(curr)) {
alert("Please enter valid numeric values.");
return;
}
if (prev === 0) {
alert("Previous Year Deflator cannot be zero.");
return;
}
// 4. Calculate Inflation Rate
// Formula: ((Current – Previous) / Previous) * 100
var diff = curr – prev;
var inflationRate = (diff / prev) * 100;
// 5. Update HTML elements with results
document.getElementById("dispPrev").innerText = prev.toFixed(2);
document.getElementById("dispCurr").innerText = curr.toFixed(2);
// Format difference with plus sign if positive
var diffFormatted = diff.toFixed(2);
if (diff > 0) {
diffFormatted = "+" + diffFormatted;
}
document.getElementById("dispDiff").innerText = diffFormatted;
// Format inflation rate
document.getElementById("finalInflation").innerText = inflationRate.toFixed(2) + "%";
// 6. Show result box
resultBox.style.display = "block";
}