A GDP deflator is a price index derived from the ratio of nominal and real GDP. Changes in the deflator measure the cost, during the current period, of purchasing the items included in GDP relative to the cost during a base year, which is periodically adjusted by BEA. Presently, the base year is 2017, which was set in 2023. The base year is assigned a value of 100, and the GDP deflator showing values greater than 100 indicates that prices are higher than during the base year.
Glossary Term