Video: Deflator index as an economic indicator
2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:46
The deflator index is an economic indicator used to recalculate the value of property of enterprises.
In terms of macroeconomic indicators, it is used to adjust the value of GNP (gross national product) for price changes. The GNP deflator is formed taking into account the funds spent by the state on the purchase of raw materials and goods for industrial purposes, as well as taking into account the funds received from the sale of goods and services in the global and domestic markets. When comparing these indicators, a deflator index is formed, which, depending on price changes, also changes.
In general, the term "deflation" implies several definitions:
-The GDP deflator (GROSS DOMESTIC PRODUCT) is used to determine the actual prices in the domestic market of the country, based on the calculation of the price index.
-The GNP deflator (GROSS NATIONAL PRODUCT) is defined as an index by the ratio of the indicators of the previous year to the current one.
-Deflator of income (prices) - an indicator of the price level in relation to the current year to the previous one.
The deflator index, according to the decree approved by the government of the Russian Federation, is set for a calendar year, based oncalculations of price growth for the current year.
In the Russian economy, the deflator index began to be used since 1996 as an indicator of weighted average prices for property of enterprises (fixed assets, material assets, current assets).
To calculate the deflator index, a joint instruction was developed by the State Statistics Committee of the Russian Federation, the Ministry of Finance of the Russian Federation, the Ministry of Economy of the Russian Federation, approved on 21.05.96. Its application is directly related to the determination of the tax base for corporate income tax. At that time, due to the crisis in the Russian economy, inflation was growing at a high speed, so the recalculation indices were made quarterly.
Recalculation of the value of assets, for example, fixed assets, is carried out sequentially, taking into account changes in the deflator index. If, for example, an object was acquired in January 1996 and retired for the purpose of sale at the end of the same year, then the residual value of this object will be adjusted for the corresponding deflator index. If the receipt and disposal of an object of fixed assets took place in the same quarter, then recalculation is not done. Profit from the sale of property can be determined by the formula:
P=CR - (BS x D,), where
P - profit from sales;
PR – selling price;
BS – book value;
D is the deflator index.
When selling property, there may not be any profit, i.e. its realization may be equal to or lower than the carrying amount. In this case, the recalculation of the inflation coefficient is not applied. For the revaluation of the book value of fixed assets, the index-the deflator has been in use since 1998.
Below is a table characterizing the degree of change in inflation rates for 4 years (1996-1999) quarterly.
| year | 1 quarter | 2 quarter | 3 quarter | 4 quarter |
| 1996 | 113, 3% | 108, 3% | 105, 2% | 103, 5% |
| 1997 | 101, 6% | 101, 2% | 101, 8% | 100, 6% |
| 1998 | 102, 5% | 102, 3% | 103, 9% | 107, 2% |
| 1999 | 108, 3% | 108, 6% | 112, 7% | 110, 1% |
Taking into account these indicators, the revaluation of the property of enterprises is carried out, except for securities, shares, intangible assets, and currency.
At a meeting of the government of the Russian Federation on October 1, 2008, the Concept of long-term socio-economic development of the Russian Federation for the period up to 2020 was considered, on the basis of which long-term projects are planned by enterprises in the construction and services sector.
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