Economics question - GDP over time, current prices vs. constant prices

Factual Questions
1

In this report on page 31 (that is, the page marked 31, which is actually page 33 of the PDF) there is a table describing the GDP of the various provinces of South Africa from 2000 to 2009. In part (a) it gives the figures in “current prices”, which I believe means that each year’s GDP is expressed in terms of the value of the Rand in that year; whereas in part (c) it gives the figures in “constant 2005 prices”, which I take to mean that the figures are adjusted for inflation, to express them in terms of the value of the Rand in 2005.

Firstly, do I understand that correctly?

Secondly, when then is the ration of the “current price” value to the “constant price” value in a given year not constant? For example, in 2009 the GDP of the Western Cape makes up 14.0% of the national GDP when expressed in “current prices” but 14.8% when expressed in “constant 2005 prices”. Why should this be? Is the correction for inflation in a given year not just a constant factor?

2

Your interpretation of current prices vs. 2005 prices is correct. Your error is in assuming that inflation affects goods and services produced in the Western Cape equally to goods and services produced in South Africa as a whole. Suppose the Western Cape produces a large proportion of the total amount of wheat produced by South Africa. If the price of wheat has increased more slowly than the price of all goods produced by South Africa, then the Western Cape’s share of nominal GDP (current prices) will be lower than its share of real GDP (2005 prices).

3

Thanks, that answers my question.