BLS Handbook of Methods

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Chapter 15.
International Price Indexes

Background

The International Price Program (IPP) produces and disseminates data on the Nation's foreign trade. The IPP, as the primary source of data on price change in the foreign trade sector of the U.S. economy, publishes monthly indexes on import and export prices of U.S. merchandise and services.

In 1961, a report on Federal Price Statistics prepared by the National Bureau of Economic Research (NBER) for Congress' Joint Economic Committee suggested that responsibility for compilation of import and export price indexes be assigned to a federal statistical agency "to obtain the attention and resources for these indexes that we believe are essential." A further study undertaken for NBER by Professors Irving Kravis and Robert Lipsey gave more impetus to the project. In their study, "Price Competitiveness in World Trade," Kravis and Lipsey outlined the need for such measures and the feasibility of producing them. During this time, the Bureau's Division of Price and Index Number Research, largely because of its expertise in the development of other price measures, had also begun research on the feasibility of producing import and export price indexes. The International Price Program was a natural result of this research and was established in 1971.

The IPP produced its first annual international price indexes in 1973. Largely as a response to changing international economic conditions and the need on the part of both the Federal Government and the private sector to obtain these data on a more timely basis, collection and publication of international price indexes were begun on a quarterly basis in 1974. The IPP increased the commodity area coverage and detail of its indexes as more samples were initiated.

This expansion attempted to meet the needs of the user public while moving toward the goal of producing indexes that covered all goods. In early 1983, the IPP published its first general index for all imports for the quarter ended in December 1982. An index for all exports was published in early 1984 for the December quarter of 1983.

Once full coverage in the import and export goods categories was available, the Office of Management and Budget in 1982 placed the IPP indexes on its list of Principal Federal Economic Indicators together with the Consumer Price Index and Producer Price Index. The IPP continued to expand by introducing selected services indexes. Various transportation services indexes were added to the IPP in the late 1980s. Research is continuing on other international services as data and resources become available.

Beginning in 1989, BLS began producing a limited number of indexes on a monthly basis. This was done primarily to permit the Bureau of the Census to publish their monthly merchandise trade statistics on an inflation-adjusted basis. The Census Bureau discontinued publishing its unit value indexes in July 1989 and began publishing constant dollar merchandise trade values deflated for the most part by the IPP measures in March 1990. With the release of March 1992 data, IPP added import locality of origin indexes, and in January 1993 began monthly publication of the major merchandise indexes.

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