About the data
Definitions
Data sources
Inflation is measured by the rate of change in a price index. Which index to use depends on which set of prices in the economy is being examined. The most general measure of the overall price level is the GDP deflator. This measure takes into account changes in government costs, inventory appreciation, and investment expenditures. The GDP deflator is usually derived implicitly as the ratio of current to constant price GDP. It may also be calculated explicitly as a Laspeyres price index in which the weights are base period quantities of output.
Consumer price indexes are constructed explicitly, based on surveys of the cost of a defined consumer market basket. Index numbers of consumer prices should be interpreted with caution. The definition of a household and the geographic (urban or rural) and income group coverage of consumer price surveys can vary widely across countries. Furthermore, the weights are derived from household expenditure surveys, which for budgetary reasons tend to be conducted infrequently in developing countries, leading to poor comparability over time. Consumer price indexes should be distinguished from retail price indexes, which are used in a few countries. Retail price indexes are based on prices at retail outlets weighted by sales turnover, so the weights may differ from country to country and over time. In addition, the basket of goods chosen varies from country to country. Although a useful indicator for measuring consumer price inflation within a country, the consumer price index is of limited value for comparisons across countries. The wholesale and food price indexes should be interpreted with similar caution.
Traditionally, index numbers of wholesale prices have been based on the prices of commodities that have some significance in the output or consumption of the country. Many wholesale price indexes now refer to a mix of agricultural and industrial goods at various stages of production and distribution, including imports and import duties. In general, a Laspeyres index is used.
Recently, some countries have compiled more specialized price indexes. Core inflation, for example, is measured by price changes for goods that affect the whole structure of prices. Such commodities as gasoline, electricity, food staples, and transport fares form the core elements of the basket. And many countries maintain price indexes for baskets of goods typically consumed by specific groups, such as the old, or industrial workers. In some economies these indexes are used in making cost-of-living adjustments to social welfare benefits or in indexing wages.
• GDP implicit deflator measures the average annual rate of price change in the economy as a whole for the periods shown. The least-squares method is used to calculate the growth rate of the GDP deflator. The regional and income group averages for the GDP implicit deflator are calculated by weighting the ratios by the 1987 GDP in U.S. dollars.
• Wholesale price indexes refer to a mix of agricultural and industrial goods at various stages of production and distribution, including imports and import duties. The Laspeyres formula is generally used.
• Consumer price indexes reflect changes in the cost to the average consumer of acquiring a fixed basket of goods and services. The Laspeyres formula is generally used.
• Food price indexes are a subindex of the consumer price index.
The primary sources of data on price levels are national statistical agencies and central banks. The GDP deflator is calculated from the World Bank's national accounts files. Consumer and wholesale price indexes are published in the International Monetary Fund's International Financial Statistics. Food price indexes are published by the United Nations in the Statistical Yearbook and Monthly Bulletin of Statistics.