Import / Export Price Index

Definition

The term import and export price index refers to a measure of the prices of goods and services purchased by domestic consumers and sold to foreign buyers. Both the import price index and export price index are designed to identify how prices vary over time and between geographies.

Explanation

A price index is a benchmark measure that allows analysts to understand how the price of goods and / or services varies over time or between geographies. Broad based indices allow economists to understand how well an economy is performing and the impact of prices on the cost of living. The export and import price indices measure the average change in goods and services that are either imported into, or exported from, the United States.

The information for these indices is gathered by the Bureau of Labor Statistics (BLS) and measures the prices paid for all goods except for military items, works of art, charity donations, used goods, railroad equipment, items leased for less than one year, repaired goods, and some custom-made capital equipment. Services are limited to air freight and fares charged for air travel. Goods and services are classified by industry using the North American Industry Classification System (NAICS), and by category for the Harmonized System (HS).

The import and export price index data have many uses, including:

  • Measuring inflation, since upward movement in prices of imports can portend inflation domestically.
  • Influencing fiscal policy, since it can help legislators to understand the impact of trade policy or tariffs.
  • Understanding the competitive position of domestic industries.
  • Influencing monetary policy, since it can help decision makers to understand the impact exchange rates have on the volume of imports and exports.
  • Adjusting trade statistics, since the import and export data can be used to deflate values into real dollars.

The International Price Program (IPP) publishes both the import and export price indexes monthly. The data is released at 8:30 a.m. Eastern Time, typically on the second week following the reference month (data is available on a one-month lag).

Related Terms

producer price indexprice indexInternational Comparison ProgramGDP deflatoremployment cost index, consumer price index