An encoder that; obtains two prediction images by performing motion compensation using two motion vectors; obtains a gradient value of each of pixels included in the two prediction images; derives a local motion estimation value for each of sub-blocks based on the pixel value and the gradient value of each of the pixels, the sub-blocks being obtained by partitioning the current block; and generates a final prediction image for the current block using the pixel value and the gradient value of each of the pixels, and the local motion estimation value derived for each of the sub-blocks. Each of the pixels in the two prediction images is interpolated with sub-pixel accuracy, and a reference range for the interpolation is included in a normal reference range that is referred to for motion compensation for the current block in normal inter prediction performed without using the local motion estimation value.