Development of external trade price indices - 2. quarter of 2007

Month-on-month comparison:

Export prices increased on average in the Q2 2007 month-on-month by 0.5 % (in Q1 by 0.7). Import prices increased by 0.9 % (while in Q1 only by 0.2 %).

Import prices in all observed groups increased, however, from the groups important in terms of weight the fastest growth showed prices of 'chemicals and related materials' (1.0 % up, mainly 'organic chemicals'). Prices of 'machinery and equipment' increased by 0.4 % (especially 'power generating machinery and equipment' and 'general industrial machinery and equipment').

The same as for export , also import prices grew in all observed groups. The most significant increase was recorded for prices of 'mineral fuels, lubricants and related materials' – by 3.5 % (especially 'petroleum, petroleum products and related materials'). From the groups important in terms of weight the prices of 'crude materials, inedible, except fuels' increased by 1.3 % (mainly 'crude rubber') and prices of 'manufactured goods classified chiefly by material' by 1.1 % (especially for 'non ferrous metals').

External trade price development was widely affected by the CZK exchange rates to the leading foreign currencies, especially to EUR and USD.

The m-o-m exchange rate index includes two most important currencies from the aspect of Czech external trade, i.e. EUR and USD; m-o-m indices of CZK exchange rates to these currencies were weighted by the weight which pertains to those currencies in the export price index.

Similarly, when comparing with the m-o-m import price indices, m-o-m EUR and USD exchange rate indices were weighted by the weight which pertains to these currencies in the import price index.

Thus, it becomes clear that both in the case of import and export, the external trade prices in the m-o-m expression, have a strong relation to exchange rate impacts. These developments can be easily observed mainly in Q2 2007 in export prices. It is rather logical conclusion because the contracts with foreign entities are, as a rule, signed for a longer period of time.

In Q2 2007, the value of the terms of trade was 99.6 % (in Q1 2007 it was 100.5 %). The lowest terms of trade value was recorded for 'mineral fuels, lubricants and related materials' 97.5 % (mainly for 'petroleum and petroleum products and related materials' and for 'crude materials, inedible, except fuels' 99.0% (mainly crude rubber). In the most important section in terms of weight 'machinery and transport equipment' the terms of trade reached the value of 100.0 %, i.e. by 0.5 p.p. less than in Q1 2007. The positive value of the terms of trade value was recorded in more important groups only for 'chemicals and related products' 100.3 %.


Year-on-year comparison:

In Q2 the export prices rose in average by 2.8 %. The prices grew despite strengthening of CZK to EUR and USD. The most significant growth was recorded for prices of 'crude materials, inedible, except fuels' by 18.5 % (mainly 'oil-seeds and oleaginous fruits'). The prices for 'machinery and transport equipment' increased by 0.2 %. Prices for any group important in terms of weight did not drop.

Import prices decreased in the Q2 by 0.4 % on average (in Q1 2007 by 1.7 %). The biggest fall was observed in relation to the world market development, among the prices of 'mineral fuels, lubricants and related materials' by 0.4 % (especially 'coal, natural gas and petroleum'). Prices of 'machinery and transport equipment' dropped by 3.2 % (mainly 'office machines and automatic data-processing machines, telecommunications and sound-recording and reproducing apparatuses'). In contrast, from important sections as for weights mainly the prices of 'crude materials, inedible, except fuels' went up by 6.6% (especially for metalliferrous ores) and prices of 'manufactured goods classified chiefly by material' increased by 4.4 % (especially for non-ferrous metals).

Terms of trade reached in Q2 2007 y-o-y positive value of 103.2 % (i.e. by 0.5 p.p. less than in Q1 2007). Y-o-y terms of trade were growing quarterly from Q4 2006 – see the graph below). The highest value was reached in 'crude materials, inedible, except fuels' 111.9 %, in 'machinery and transport equipment' 103.5 % (in Q1 2007 104.2 %). In Q2 2007, the terms of trade did not show negative value for any of the observed groups.

What was the reason for the different price development of import and export prices? As it was shown above, external trade prices are exposed to many effects, among other things, also to the CZK exchange rate to foreign currencies. This influence is important and often even decisive mainly in m-o-m expression; however, it markedly affects also the level of y-o-y external trade price indices. The development of monthly y-o-y changes of exchange rates is given in the graph below.

Prepared by: Vladimír Klimeš, Price Statistics Department
Director: Jiří Mrázek, phone (+420) 274 052 533