If nominal GDP increases while real GDP remains constant, what does this indicate about the economy?

When nominal GDP increases while real GDP stays the same, it usually means that prices for goods and services have risen, leading to inflation. Nominal GDP measures the total value of all goods and services produced in an economy at current prices, while real GDP adjusts for inflation and reflects the true growth in volume. For example, if a country produces the same amount of cars and bread this year as last year, but prices for those goods have increased, the nominal GDP will go up due to higher prices, even though the actual production hasn’t changed. This situation can be concerning because it suggests that people may be paying more for the same items without an increase in their purchasing power or economic output. Therefore, while the economy might look like it’s growing because of higher nominal GDP, the real economic growth might not be happening.