Using GDP-deflator as a proxy for the Inflation rate

[lakis]

Hi all,

I am newly-research student and I would like your opinion regarding the derivation of the Inflation rate in Quarterly data points.

I have decided to use Quarterly GDP-deflator, (defined as 100*(Nominal GDP/Real GDP)) as a proxy for the Inflation. So the data I have right now is the quarterly GDP deflator (in logs) and I want to derive the Inflation rate in quarterly data points.

So for example, if the GDP deflator in logs: 2000:Q1 defl1
2000:Q2 defl2
2000:Q3 defl3
2000:Q4 defl4
2001:Q1 defl5
2001:Q2 defl6

then the quarterly Inflation rate for 2001:Q1 will be (defl5) - (defl1)
and for the quarterly Inflation rate for 2001:Q2 will be (defl6) - (defl2) ??????????

Many thanks

[lakis]

Could anyone please help me with that? Thank you

[trubador]

Which inflation rate do you need? If it is the annual inflation (i.e. year-on-year), then your calculations are fine. However, if you are interested in the quarterly inflation (i.e. quarter-on-quarter), then 2001Q2 should read (defl6-defl5).