Import Prices - is one of the figures applied in fundamental analysis of the market. It reports about change of import price for a month, as well it is inflation indicator. This index is constituted by import prices of many categories excluding pieces of art, military goods etc.
Formation of import prices
Any product can be estimated within market framework of a certain state. Therefore, customs duty for import is laid in price of imported product that covers the difference between national and import product of the same category.
When needed, import prices can be brought down to zero in order to boost import. It is made when imported goods are not produced in the country, when favorable conditions for less developed country are set or if trade relations with a certain country are important. This tariff is included in cost of product, therefore, Import Price index is taken into account upon calculation of consumer prices.
Import Price index is published as percentage, because current figures depend on index value in previous periods whereas recent figure does not depend on current. Thus, the condition of measurement is that previous figure is equal to 100%. If current import prices grew, for example, for 20%, final value will be 120%. In news table this index is usually expressed as incremental/decline percentage, for example, 0,3% or -0,5%.
Import Prices index in fundamental analysis
Import Prices impacts on retail prices of consumer basket, therefore, it helps to forecast movement of quotes. Although present index is not a significant figure of Forex analysis, it can be used as a tool for confirmation. For instance, increase in interest rates and import prices can lead to growth of base currency rate. The reason is that with a consolidated currency the import price tend to decline.
Import Prices are published once a month together with export prices. This statistics is represented from 1989 in the USA and from 2005 in Germany, France, Great Britan, Pacific region of South East Asia (ASEAN), as well as in the Middle East. Above all, traders use US data reported usually on 10th of every month and German data reported in 20-s of every month, because those figures impact on major global currencies: US dollar and Euro.