Industrial import price index overview



Data extracted in March 2018.

Planned article update: August 2019.

Highlights


EA-19 industrial import prices for total industry, euro and non-euro-area, gross data, 2005-2017 (2015=100), Source: Eurostat (sts_inpi_m)

The industrial import price index (abbreviated as IMPR or sometimes MPI) is a business cycle indicator which measures monthly changes of prices of products which are imported by domestic businesses from other countries.

According to the short-term business statistics regulation only countries in the euro area are obliged to transmit import prices to Eurostat. However several non-euro-area countries in the European Union (EU) and even some EFTA countries provide this information as well.

The indices for import prices are calculated with a distinction between imports coming from within or outside the euro area.






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Import prices for total industry

Between January 2005 and July 2008 (pre-crisis peak) import prices for total industry increased by more than 16 percentage points (i.e. with at an average rate of 0.4 % per month). In the following nine months until April 2009 import prices dropped at a pace of around 1.6 % every month to the level of around four years earlier.

In the following two years until Mid-2012 the price level increased again. Afterwards a distinct downwards trend (with temporary sharp decreases during the winters 2014-15 and 2015-16 which were due to energy prices) set in which lasted until February 2016. During the years 2016 and 2017 however import prices increased with a monthly average rate of 0.3 % and almost regained the pre-crisis level (Figure 1).

Figure 1: EA-19 industrial import prices for total industry, euro and non-euro-area, gross data, 2005-2017 (2015=100), Source: Eurostat (sts_inpi_m)

For the different main industrial groupings price developments were relatively heterogeneous. Intermediate goods show a similar pattern as total industry, i.e. an increase between 2005 and the second half of 2008, a prolonged fall until around mid-2009, followed by an increase which resulted in index levels some points higher than before the crisis.

Figure 2: EA-19 Industrial import prices for total industry and main industrial groupings (gross) 2005-2017 (2015=100), Source: Eurostat (sts_inpi_m)

Capital goods and durable-consumer goods

Prices for capital goods and durable-consumer goods show an almost identical and rather stable pattern. Since 2005 they decreased by around 7 percentage points but apparently were hardly affected by the crisis. Prices for non-durable consumer good imports on the other hand have displayed a rather steady increase during this period and are now around 18 percentage points higher than in 2005.

Energy products

Import prices for energy products (which constitute almost 12 % of the total euro area index) are much more volatile than the prices for the other product groups. Apart from a temporary drop in the second half of 2006 they increased between January 2005 and July 2008. Then they fell by 60 percentage points during the crisis. Afterwards the price level rose to a peak level of more than 170 index points in March 2012. Between March 2012 and February 2016 the import price level for energy fell again to a long time low of around 70 percentage points. Since the beginning of 2016 prices are increasing again and have regained an index level of 110.

Annual changes

In all countries for which data since 2005 are available total import prices show basically the same up-and-down-pattern. Positive rates of around 4 % or more in 2006 followed by lower but still positive rates in 2007 and again relatively high rates in 2008. For 2009 all countries recorded negative rates of change (corresponding with the steep fall of the index in the second half of 2008 and early 2009) and again relatively high positive rates in 2010 and 2011. In 2012 the growth rates were clearly lower again. In 2013, 2014, 2015, and 2016 import prices in all Member States of the euro area registered a negative annual growth rate but regained positive levels in 2017 (Table 1).

Table 1: Industrial import price index, annual rates of change, 2005-2017, Source: Eurostat (sts_inpi_a)

Table 2 provides an overview of the annual changes for the main industrial groupings but also for the various manufacturing activities. Strong ups and downs in the annual prices can be observed in particular for mining and the extraction of petroleum and gas, for coke and refined petroleum but also for basic metals.

Table 2: EA-19 Industrial import price index, annual rates of change, total industry, main industrial groupings and economic activities, 2006-2017, Source: Eurostat (sts_inpi_a)

Data sources

The obligation to transmit import price data to Eurostat was introduced in 2005 by Regulation (EC) No 1158/2005of 6 July 2005. The need for this indicator arose in particular in the context of the European Monetary Union. Industrial import price indices became available in 2007. Most series start with the year 2006.

The import price indices cover most mining activities and a large number of manufactured products at the 2-digit level of the NACE Rev. 2. The index is calculated on the basis of the Statistical classification of products by activity (CPA). Some product groups are however excluded (such as nuclear products, weapons, ships and aircrafts, printing and some repair services, see Table 2).

Import prices in short-term statistics are defined as follows, they:

  • include cost, insurance and freight at the national border of the importing country, but not duties or import taxes;
  • are actual transaction prices (not list prices) including e.g. discounts;
  • are measured in the currency of the importing country. Transactions in other currencies have to be converted (this implies that the import price index is affected by exchange rate fluctuations);
  • must take into account all price determining qualities of the imported products (e.g. service and guarantee conditions, included transport costs etc.);
  • are recorded when ownership is transferred and the index should reflect the average prices during the reference period (month).

Currently the indices for industrial import prices are calculated with 2010 as the base year (=100).

Context

The industrial import prices index shows the development of prices of goods imported by enterprises which are used as intermediate products in their production process, as capital goods or as goods to be resold to consumers. The development of the index is used to forecast the development of other prices notably for domestic goods. The index is an important tool for the European Central Bank and the national central banks for monitoring and analysing inflationary developments. Industrial import prices are part of the so-called 'Principal European Economic Indicators (PEEI)' which are used to monitor and steer economic and monetary policies in the EU and in the euro area.

The industrial import price index is not the only statistical indicator which provides information on the price developments of imported goods. Unit value indices (UVIs) are calculated directly from international trade data. In principle, they are simply the total value of imports of a product, divided by the total amount imported (for most products this is measured in weight). UVIs have a long history, and long-time series are available. One of the key features of UVIs is the level of detail. Elementary UVIs can be calculated for around 10 000 products, based on the most detailed level of the combined nomenclature used for classifying international trade. UVIs record price changes which are not purely a result of an evolution of prices but which are also due to quality changes and change in the mix of products. Industrial import prices, while not as detailed as UVIs, are adjusted for quality changes and allow a more precise identification of inflationary pressures stemming from import prices.

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