Import and Export Price Indices

Changes in import and export prices are in most countries measured using unit-value indices. Due to weaknesses in unit value indices, ‘true’ price indices for export/import are preferred. However, this requires more resources, and so only a limited number of countries are at present making ‘true’ price indices for international trade.

Importers and exporters are required to declare the value and the quantity of shipments. Unit-value indices can therefor easily be constructed by dividing value by quantity for each product-group. However, in order to measure pure price changes there should not be any changes in the creation of the product groups or in the underlying products. However, this is not always the case. Because products change, unit price indices will not only reflect changes in prices but also changes in quantity – thus, the unit value indices will generally overstate prices changes.

Price indices (‘true’ price indices) for imports and exports are normally constructed using the Paasche formula – based on current period weights. The indices should be representative for total exports/imports, however, are normally limited to goods and services going trough declaration with some adjustments for other products if information is available. The weights used are based on information from the costume authorities, while the price data are based on special price surveys (sample drawn from the business register). Paasche price indices for export/import will in most cases indicate a lower price change than unit price indices.