The Inflation Rate Determined as a Change in GDP Deflator and in CPI

Abstract

The paper aims at presenting two of the most applied methods in determining the inflation rate, based on the GDP deflator and Consumer Price Index, and comparing the calculation proceedings, advantages and drawbacks of each of them. Even if the results are close as a value, the structures of consumption taken into account in measuring each index are quite different, one of them evaluating the price raise for all the goods/services produced inside the country borders, the other starting the calculations by composing a typical market basket for a typical urban consumer.