Definition
Nominal means measured in today's dollars as they are. Real means adjusted for inflation.
The story
If your pay rises 4% but prices rise 3%, your nominal raise is 4% and your real raise is about 1%: that's how much more you can actually buy. The same idea applies to GDP (gross domestic product), interest rates and investment returns.
Why markets watch it
Many economic headlines can look very different once inflation is taken out, so it's worth checking which one you're reading.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms