The GDP deflator thus gives more weight to goods (such as capital goods) whose prices are falling the fastest.

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To state the obvious, capital assets and consumer goods prices rise and fall all the time, and their fluctuations are essential for telling the markets what economic concepts should receive capital in abundance, and which ones should be starved of it.

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For instance, the rate of deflation in capital goods has deepened, with prices falling by 6.9% in the year to the second quarter.

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