CPI and GDP deflator differences

CPI(Consumer Price Index)

: a measure of the overall cost of the goods and services bought by a typical consumer.

The problem of CPI

1) substitution bias: when the price of a good rises, people substitute towards goods that  have become relatively less expensive.

2) introduction of new goods, which is not reflected quickly in the CPI

3) unmeasured quality change

GDP deflator 

: a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100

 

	CPI	GDP deflator
by the difference of definition	the prices of all goods and services bought by consumers	whole products produced within a country
period	monthly	quarterly
issued by	National Statistics Office	Bank of Korea
	including foreign goods	not including foreign goods
	comparing the price of a fixed basket of goods and services to the price of the basket in the base year	comparing the price of currently produced goods and services to the price of the same goods and services in the base year