3.9 Current prices (CP) and fixed prices (FP)

All data in the national accounts are expressed in current prices (CP); some are additionally expressed in fixed prices (FP). Current price values can be divided into price and volume components (V=P*Q, i.e. value is the product of price and quantity).

Current-price GDP describes the current value of total production. It is used in international comparisons (it provides the basis for GDP per capita rates) and in drafting EU budgets, for instance. The sources consulted in compiling the national accounts (such as financial statements) use current prices, i.e. they indicate the true current sums; current-price GDP therefore reflects the true current money value of total production. Current-value GDP provides a point of reference for many other measures as well, such as EMU deficit and debt, public expenditure and development aid. Calculations of how large a proportion different industries account of total value added are also based on current-price figures (although not on GDP but on national gross value added at basic prices).

Fixed-price figures are calculated in relation to price levels for a certain base year, i.e. they are unaffected by changes in price level due to inflation. Real GDP growth or volume change in GDP is calculated on the basis of fixed-price figures.

Examples