SNA: Basic Methods to Obtain Constant Price Estimates

Three basic methods can be used to obtain constant price, or volume measures for an item; revaluation, deflation, or volume extrapolation.

Revaluation means to collect physical quantities and explicitly value each period’s quantities using the base
year’s prices. This method requires that, for all products, homogeneous physical quantities can be defined and observed, and that a complete coverage of the quantities transacted can be collected. Because of the demands, this method is mainly used for agricultural products, and for goods produced for own final use.

Deflation means to divide each periods current price value/estimate with an appropriate price index

Volume extrapolation means to update the base year’s value according to an appropriate volume index/indicator