Report
GDP deflator, consumer prices, import prices and unit labour costs
Normally, the growth rate of the GDP deflator is closely linked to the growth rate of unit labour costs (it differs by the change in profit margins). Also, the growth rate of household consumer prices normally depends on the growth rate of the GDP deflator and the growth rate of import prices. We show that these relationships are now well established in the United States, the euro zone and the United Kingdom. We then analyse the dynamics of inflation (household consumer prices). Inflation should normally converge towards the growth rate of the GDP deflator, once the base effects that affect import prices have disappeared. We see that in the past, inflation measured by growth in household consumer prices converged, when import prices stabilised, towards inflation measured by growth in the GDP deflator. This shows that inflation is much higher at the end of 2023 than consumer price growth indicates.
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Natixis
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