The GDP deflator

The GDP deflitor is a measure of inflation , It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year. 

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Since the deflator covers the entire range of goods and services produced in the economy — as against the limited commodity baskets for the wholesale or consumer price indices — it is seen as a more comprehensive measure of inflation.


It measures the average level of prices of all goods and services the make GDP. It is calculated by the formula: 
                                           

This ratio helps show the extent to which the increase in gross domestic product has happened on account of higher prices rather than increase in output.