International Merchandise Trade Price Index (IMTPI)

Detailed information for April 2016

This activity is conducted to provide trade prices and volume measurement (including constant dollars) for integration to the Canadian System of National Accounts framework, forecasting exercises, deflation process and price measurement.

Data release - June 3, 2016

• Description
• Data sources and methodology
• Data accuracy

Description

This activity is conducted to provide trade prices and volume measurement (including constant dollars) for integration to the Canadian System of National Accounts framework, forecasting exercises, deflation process and price measurement.

The International Merchandise Trade Price Index (IMTPI) is an indicator of the changes in import and export prices. The IMTPI measures price change by comparing, through time, the weighted average cost of a basket of traded commodities. The price indexes are based in part on actual unit values processed by the International Trade Division and, where unit values are unavailable or too volatile, by the use of price relatives provided by other sources.

Fixed (Laspeyres) and current (Paasche) weighted price indexes are calculated monthly, quarterly and annually. Weights are based on the volume of traded goods in the base period and are contrasted with data from the current month. This allows the price index to reflect pure price movements in the Laspeyres index and price/volume movements in the Paasche index.

The Laspeyres volume index is derived by dividing a value index by the corresponding Paasche price index and is, therefore, weighted with fixed price weights for the base year.

The indexes are calculated on a Customs and BOP basis at various levels of aggregation. The Customs basis also includes an "all country" dimension as well as a ''United States'' dimension. This allows trade with the United States to be analyzed apart from the rest of the trade data, reflecting the relative importance of the United States as Canada's major trading partner.

An important use of the import and export price index is to deflate, to constant dollars, Canadian International Merchandise Trade, which is input into the Canadian System of National Accounts calculation of Gross Domestic Product. Constant dollars are produced using a Laspeyres formula. Chained dollars are also produced using the Fisher formula.

Statistical activity

This activity is part of the Canadian International Merchandise Trade Program. The primary objective of this statistical program is to measure the change in the stock of material resources of Canada resulting from the movement of merchandise into or out of the country.

Canadian trade statistics are compiled according to the "General" system of trade as defined by the United Nations Statistical Office. The general trade system is in use when the statistical territory of a country coincides with its economic territory. Consequently, under the general trade system, imports include all goods entering the economic territory of a compiling country, and exports include all goods leaving the economic territory of a compiling country.

The closing of the statistical month for imports and exports is defined as the last calendar day of the month based on the date of clearance from Customs. Documents received too late for incorporation in the current month are assigned to the month the transaction took place and are published the following statistical month.

Additional information about the Canadian International Merchandise Trade Program is available through the link that follows.

• Additional documentation

Reference period: Month

Collection period: Every month

Subjects

• Balance of international payments
• Economic accounts
• International merchandise trade price indexes
• International trade
• Merchandise exports
• Merchandise imports
• Prices and price indexes

Data sources and methodology

Instrument design

This methodology does not apply.

Sampling

The International Merchandise Trade Price Index (IMTPI) is a composite price index designed to express, in a single index, price changes that involve a range of commodities. In order to accurately reflect the realities of the price movement, a fixed basket of goods is chosen which is representative and correlated to the rest of the commodities in the trade universe. All commodities in the basket have been divided into groups where criteria, such as value, were used to select the most significant ones.

The indexes are based on a non-random sample of import and export commodity classes for which either a meaningful unit value can be calculated or for which a representative proxy index can be found.

Data sources

Data are extracted from administrative files and derived from other Statistics Canada surveys and/or other sources.

International trade price and volume indexes for all countries and for the United States (U.S.) are constructed from detailed import and export merchandise trade data. The basic price indicators of these indexes originate from two sources: unit values derived from the detailed Custom base data and specific price indexes taken from Canadian and foreign sources.

Several organisations provide the Canadian International Merchandise Trade Statistical Program with proxies that are used as price relatives in the calculation of the Laspeyres and Paasche price indexes. They are:

- The United States Bureau of Labor Statistics publishes the Producer Price Index (PPI) which measures the average change over time in the selling prices received by US producers for their output. The PPI includes indexes at various levels of aggregation and is used primarily to calculate a number of CIMT's import price indexes.

- Statistics Canada's Producer Prices Division (PPD) publishes the Industrial Product Price Index (IPPI) (Record number 2318) which measures price changes for major commodities sold by manufacturers in Canada. Most of the specified price indexes taken from the IPPI are used to calculate ITD's export price indexes.

- PPD publishes the Computer and Peripheral Price Index (CPPI) (Record number 5032) which measures changes in the price of computers and computer peripherals sold to governments, businesses and consumers. It is used by ITD primarily to measure price changes in imports of computer parts.

- PPD also publishes the Export Import Price Report (Record number 5142) which is a survey that measures price changes for key commodities that have proven difficult to measure through other methods.

- The Bank of Japan publishes the Corporate Goods Price Index (CGPI) which measures price changes for goods traded in the Japanese corporate sector. ITD uses the Export Price Index component of the CGPI to measure Canada's import prices for goods imported from Asian countries.

- The National Energy Board provides price data on electricity and the Manufacturing and Energy Division of Statistics Canada provides data on exports of crude petroleum and natural gas.

Error detection

Once the Laspeyres indexes and Paasche indexes are calculated, a module uses a method described by Hidiroglou and Berthelot (1986) to identify outlying observations. Historical Trend Method is also adapted and used to identify transactions within an aggregation that are "abnormal" for a given period. The error detection process is only done at the first stage of aggregation in the construction of the International Merchandise Trade Price Index.

Imputation

If, during the error detection process, a unit value has been identified as an outlier, corrective measures are taken.

For Laspeyres and Paasche price indexes that cannot be calculated due to a lack of transactions or missing proxy information, a valid index from the previous period is automatically carried forward and repeated for the current period. This implies no measurable change in the price for the commodity in question.

Estimation

Prices for the commodity group 'Special transactions trade' cannot be reliably measured through unit values or proxies, and therefore an estimate is required. A weighted average of the price indexes calculated for all other commodity groups is used to estimate the Laspeyres and Paasche indexes for this group.

A commodity group 'Other balance of payments adjustments' exists only for the BOP basis. Prices for this category cannot be measured through conventional means, and so an estimate is required. The National Economic Accounts Division (NEAD) provides this estimate to International Accounts and Trade Division (IATD).

Quality evaluation

Aggregated data are subject to month over month and year over year analysis to detect errors and explain observed movements.

The models used to seasonally adjust are reviewed annually by the Business Survey Methods Division of Statistics Canada.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Revisions and seasonal adjustment

Merchandise trade data are revised on an ongoing basis for each month of the current year. Current year revisions are reflected in both the Customs and balance of payments (BOP) based data. The previous year's Customs data are revised with the release of the January and February reference months as well as on a quarterly basis. The previous two years of Customs based data are revised annually and are released in February with the December reference month. The previous year's BOP based data are revised with the release of the January, February, March and April reference months. Revisions to BOP based data for previous years are released annually in December with the October reference month.

Factors influencing revisions include late receipt of import and export documentation, incorrect information on Customs forms, replacement of estimates produced for the energy section with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors.

Revised data are available in the appropriate CANSIM tables.

• Additional documentation

Data accuracy

The administrative data used to compile trade statistics is considered to be complete and accurate. Any anomalies or inconsistencies detected are verified with the source, and where necessary, adjustments are made to reconcile data with the conceptual framework of the series. The administrative agencies used are considered to be the best source available.

It is not unusual for the accuracy of export statistics to be adversely affected by undercoverage and/or country misallocation. While Statistics Canada does not have a direct measure of undercoverage, a monthly estimated adjustment is included within balance of payments based data. Country misallocation occurs when the country of final destination is inaccurately reported on the Customs documentation. This occurs most frequently when goods are routed through an intermediary country before continuing to their final destination with the intermediary country being reported as the final destination of the goods.