What does the indicator describe?

The indices of foreign trade prices measure the average development of the prices of all products traded between Germany and foreign countries. The reference value of the overall indices of import or export prices is the sum of import or export values in the base year. The indices are used for many purposes: The import price index is applied to estimate the price impact on the domestic price level from abroad. The foreign trade price indices are used to deflate other aggregates of economic statistics such as the import and export values in the context of national accounts. Associations and companies use especially the sub-indices of import and export prices for specific product groups for purposes of market monitoring and pricing.

How is the indicator calculated?

Foreign trade prices are collected monthly among a representative sample of reporting units. As regards imports, currently about 2,930 companies are asked for their import prices regarding a total of 5,947 commodities, while for exports the figures are about 2,700 companies and a total of 5,391 commodities. For some goods traded at international commodity exchanges - e.g. oil-producing plants, grain, non-ferrous metals and precious metals -, international exchange quotations as published in economic journals and specialised publications are used, too. In contrast to other price statistics, the price data here do not refer to a reference day, but they are average prices of all comparable contracts concluded in the reference month. The prices are collected in a centralised manner by the Federal Statistical Office. Results for individual Länder are not computed. The indices are based on a total of about 11,400 individual price series, which are represented in the form of index numbers on the basis of the price level recorded in the base year (= 100).

The prices collected monthly are transaction prices (no list prices) and refer to the terms of trade "free at German border" (i.e. "cif" for import prices, "fob" for export prices). Public duties (customs, levies, monetary compensatory amounts, import turnover tax for imports, as well as turnover tax, excise duties and export subsidies for exports) are not included in the prices. Only euro prices are included in the index calculations. Prices reported in foreign currencies are converted using the exchange rates applicable.

The indices of foreign trade prices are calculated using the Laspeyres formula, which is generally applied in German price statistics. What is characteristic of this type of index is that it records the price development over time, excluding changes in quantity. This is achieved by defining a weighting pattern, which is derived from the import and export values of the base year. The weights obtained from the current base year 2000 will remain unchanged until the index is rebased to a new base year (about every 5 years). In terms of major calculations performed, the indices may be described as weighted averages of the price index numbers for a representative sample of import and export goods, represented with the base year = 100.

The purpose of foreign trade price indices – as of the other price indices of official statistics – is to measure pure price changes. This is achieved by keeping constant all the factors relevant for the price level (i.a.quantity unit of the products and their qualitative nature, terms of delivery and payment). If one of those variables changes, the difference between the new price and the price last reported may include an improper price change, which is eliminated applying various quality adjustment methods.

When is the indicator released?

The monthly results are published in a press release around the 25th day of the subsequent month. The press releases and the detailed release calendar are available on the website of the Federal Statistical Office.

The indices of foreign trade prices are calculated and published not only for the total of import and export commodities and for major sub-indices, but also for a large number of commodity groups at various levels of aggregation. The different examination levels of the foreign trade price indices require the results to be shown in several breakdowns:

* commodity breakdown
o by commodity groups of the food industry and of trade and industry;
o by selected headings of the national Product Classification for Production Statistics (GP), 2002 edition, in a breakdown by euro countries and non-euro countries where possible;
o according to the Standard International Trade Classification (SITC Revision 3), 1986 edition;

* regional breakdown
o by euro countries;
o by non-euro countries;

How accurate is the indicator?

The foreign trade price indices are calculated as index numbers with one decimal digit. The figures are final for the reference month. When changing over to a more recent base year, revision differences occur as a result of using new bases for calculation (basket of commodities, weighting pattern, sample of reporting units).