Current prices
Also called: Nominal prices · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 10, Ch 1 "Development"; Class 11, Ch 1 "Introduction (Statistics for Economics)"; Class 11, Ch 6 "Correlation"
Meaning
Current prices are the prices of the year being measured. GDP valued at current prices is called nominal GDP. It can rise because more goods were produced, because prices went up, or both. So a rise in nominal GDP does not show on its own whether the economy actually produced more.
Example
An economy makes only bread. In 2000 it makes 100 loaves at ₹10 each, so GDP at current prices is ₹1,000. In 2001 it makes 110 loaves at ₹15 each, so GDP at current prices is ₹1,650. That is a 65% rise, but output grew by only 10%. The rest came from higher prices.
Don't confuse with
- Constant prices: these are the prices of a fixed base year (a reference year), such as 2011-12. GDP at constant prices (real GDP) changes only when the amount produced changes. At 2000 prices, the 2001 bread GDP above is ₹1,100, not ₹1,650.