Definition: Deflator of sales
It is the objective of the deflator of sales to adjust turnover for the impact of price changes.
The deflator of sales in retail trade is a deflator not of the service provided but of the goods sold.
The prices used to calculate the deflator for an activity are calculated as a weighted average of the relevant goods price indices for that activity. It is essential that all price-determining characteristics of the products are taken into account, including quantity of units sold, transport provided, rebates, guarantee conditions and destination.
The specification must be such that in subsequent reference periods, the observation unit is able uniquely to identify the good and to provide the appropriate price per unit.
In order to show the true development of price movements, it should be an actual transaction price, and not a list price.
The collected price information should in principle reflect the average price during the reference period. In practice the information actually collected may refer to a particular day in the middle of the reference period that should be determined as a representative figure for the reference period.
European Union, Commission Regulation (EC) No 1503/2006 of 28 September 2006 implementing and amending Council Regulation (EC) No 1165/98 concerning short-term statistics as regards definitions of variables, list of variables and frequency of data compilation