International Trade Price Indexes
Detailed information for April 2001
This statistical 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 21, 2001
This survey is conducted to provide trade prices and volume measurement (including constant dollars) for:
integration to the Canadian System of National Accounts framework;
forecasting exercises (Bank of Canada, Finance, Industry, Science and Technology, etc.);
deflation process (I-O Tables, Gross Domestic Product by Industry); and
price measurement (analysis of imported inflation and competitiveness).
More particularly, 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, when the unit values are not accurate or are unavailable, by the use of price relatives provided by other sources. To better aid analysing of data these price indices are calculated on both a Paasche (current weighted) and a Laspeyres (fixed/base weighted) basis. 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 model and price/quantity movements as provided by the Paasche index. On top of these benefits the indices are also calculated at various levels of aggregation including an all country level and on ''United States'' level. This procedure allows trade with the United States to be analysed isolated from the rest of the trade data, reflecting the relative importance of the United States as Canada's major trading partner. In the end, the main use of the import and export price index is to deflate, to constant dollars, Canadian merchandise trade, which are input into the Canadian System of National Accounts calculation of GDP.
There are various uses of the IMTPI and its importance has grown over the past decade, as both imports and exports are accounting for more of Canada's economic output. First, it is used as a tool for deflating current dollar estimates to obtain constant dollar estimates that eliminate the effects of price change, providing accurate trade volume measurements. This allows trade data integration into the Canadian System of National Accounts framework. Government departments use the price index in setting, evaluating and resolving trade policies. Specifically, it is a key tool for tariff and quota negotiations, as it provides an indication of the inflation of Canadian imports and exports as well as the international competitiveness of various industries and sectors. Finally, business analysts and economists use the IMTPI for analysis and research about such questions as the causes and effects that price changes have on trade data and assist in accounting for regional disparities that may arise.
Reference period: Month
Collection period: Calendar month
- 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
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 are collected 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.
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.
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.
Fixed (Laspeyres) and current (Paasche) weighted price indexes are calculated monthly, quarterly and annually on a Customs as well as on a Balance of Payments basis both for all countries and for United States.
The Paasche price indices, which are current-weighted, are calculated from price relatives based on the average prices in 1997. The weights reflect trade values for the month, quarter or year to which the index refers and hence change from period to period. The Laspeyres volume index is derived by dividing a value index by the corresponding Paasche price index and is, therefore, weighted with fixed 1997 price weights.
More information is provided in the document titled "Changes in the International Trade Merchandise Index" which is accessible in the Documentation section below.
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.
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
Revisions - In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Customs basis data are revised for the previous data year each quarter.
Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors.
Seasonal Adjustment - Both export and import statistics show large monthly fluctuations. In order to isolate turning points or trends in the basic data, it is necessary to eliminate this effect of seasonal movement. Statistics Canada uses the X-11-ARIMA (Dagum, 1975 and 1979) method to remove seasonal fluctuations from time series.
See record no. 2201 - Canadian International Merchandise Trade (Customs Basis) - for a full description on seasonal adjustment.
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.