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Does Gdp Growth Figure Include £ Inflation?

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When budget specifies GDP growth does it include expected inflation?

From the first thought it should otherwise we'd be still measuring GDP in "old money?"

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When budget specifies GDP growth does it include expected inflation?

From the first thought it should otherwise we'd be still measuring GDP in "old money?"

It's the growth in nominal GDP minus the GDP Deflator.

The GDP deflator (implicit price deflator for GDP) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy.

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When budget specifies GDP growth does it include expected inflation?

From the first thought it should otherwise we'd be still measuring GDP in "old money?"

Yes, I believe. If you look you'll see that there's a GDP deflator (e.g. look at some of FreeTrader's charts/tables in the Budget thread) which corrects for the fact that a 2012 pound is worth less than a 2011 pound,

Peter.

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Just don't go thinking the deflator is the same as CPI / RPI adjustment: it ain't

I suppose that's because it measures domestic production and services only; nothing imported.

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When budget specifies GDP growth does it include expected inflation?

From the first thought it should otherwise we'd be still measuring GDP in "old money?"

Yes, growth is real. HM Treasury have a "deflator" number they multiple everything by to convert from nominal to real.

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There is an 'implicit' rate of inflation (the GDP seflator) corrected for in the GDP calculations.

This is not measured like the RPI/CPI are measured, but is the result of measuring GDP. The GDP deflator is calculated from GDP - the GDP estimate is not calculated using the GDP deflator.

GDP is calculated in "old pounds". A reference time is chosen (e.g. 2008) and all GDP calculations are based on 2008 prices. This way there is no need to correct GDP figures for inflation, as most methods of measuring inflation are biased in some way.

The GDP deflator is the figure you get if you compare GDP calculated this way to GDP calculated using "new pounds"

Edited by ChumpusRex

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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