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What is Key Differences: GDP Deflator vs CPI about?

The GDP deflator and CPI are both used to measure inflation but have key differences. The GDP deflator measures price changes of all domestically produced goods and services, while the CPI measures price changes of goods and services purchased by consumers, including imports. Additionally, the GDP deflator weights prices dynamically based on market values while the CPI uses a fixed basket of goods. These differences can cause the GDP deflator and CPI to diverge in measuring inflation in the short-term.

Author

Ella Mae

Language

EN