Export / Import Price Index during November 2010

Export / Import Price Index during November 2010

□ Export Price Index(won basis) increased by 1.2% month-on-month in November 2010.

o Export Price Index rose by 1.9% in year-on-year terms.

□ Import Price Index(won basis) increased by 2.1% month-on-month in November 2010.

o Import Price Index rose by 8.2% in year-on-year terms.

Export / Import Price Index

(rate, %)

Weight Month-on-month Year-on-year

Sep '10 Oct Nov Sep '10 Oct Nov

Ex po rt

All Commodities 1000.0 -0.4 -1.7 1.2 -0.4 1.0 1.9

(0.5) (1.5) (1.1) (4.8) (6.0) (6.0)

Agricultural, Forest &

Marine Products 5.1 5.6 -5.5 1.7 12.4 13.7 14.0

Manufacturing Industry Products 994.9 -0.5 -1.7 1.2 -0.4 0.9 1.9

mI po rt

All Commodities 1000.0 0.0 -0.9 2.1 7.8 8.1 8.2

(1.0) (2.4) (2.0) (12.4) (12.5) (11.7)

Raw Materials 278.2 0.0 -0.6 2.4 18.2 15.0 12.7

Intermediate Goods 556.7 0.2 -0.8 2.4 4.2 6.3 7.7

Capital Goods 98.6 -0.6 -2.0 -0.4 -3.5 -2.6 -2.3

Consumer Goods 66.5 0.1 -1.5 1.0 -0.9 -0.1 1.3

* Figures in parentheses represent changes(%) on a contract currency basis

(Chart)

Export / Import Price Index

A. Index

2. Import Prices A. Index

B. Changes

(Appendix)

Compiling of Export / Import Price Index

1. Definition and Use

― The purpose of the Export/Import Price Index is to measure fluctuation of prices of commodities exported and imported. The Export/Import Price Index is used to forecast the effects of price fluctuations of imported and exported commodities on domestic prices and cost fluctuations of imported and exported commodities.

2. Frequency

― Prices for the previous month are surveyed at the beginning of each month.

3. Prices surveyed

― Prices are based on the time the export/import contract is entered into in order to lead domestic prices.

― Export prices are on an FOB basis, and import prices are on CIF. Prices of some items are subject to trade practice.

4. Surveyed Items

― As items (export : 211, import : 234 as of 2005) with shares of over 1/2,000 of the country's trading volume, each can be representative of the price movements of the group of commodities it belongs to within similar industries. The quality of the item should also rarely change, and it should be possible to maintain the item's time series.

5. Ways of compiling statistics

― Classification

ㅇBasic classification : The Korea Standard Industrial Classification (KSIC) is transformed and used. The basic classification is by industrial classification.

Exports has two categories of agricultural, forest and marine products and manufacturing industry products, and imports has three categories of agricultural, forest and marine products, mining products and manufacturing industry products.

ㅇSpecialized classification : For user convenience, specialized classification includes foods/excluding foods, energy/excluding energy, information technology/excluding IT, foods & energy/excluding foods & energy, group by use, group by trade, and group by industrial type.

Category # of items Weight

Exports

Total Index 211 1000.0

Basic

Agricultural, forest & marine

products 5 5.1

Manufacturing industry

products 206 994.9

Imports

Total Index 234 1000.0

Basic

Agricultural, forest & marine

products 16 37.6

Mining products 10 248.0

Manufacturing industry

products 208 714.4

By use

Raw materials 26* 278.2

Intermediate goods 170* 556.7

Capital goods 27* 98.6

Consumer goods 54* 66.5

* Weights are allocated in proportion to the input ratio of items by use. Hence, the total number of items under the By use category is not identical to the number of items for the total index (234).

― Weight

ㅇWeights are calculated permillage in accordance with the rate of the transaction amounts of each item (the universal transaction amounts = 1,000).

― Ways of compiling statistics

ㅇThe headline indexes for export and import prices are converted to Korean Won in order to facilitate understanding of the effects on the domestic price level, while additional indexes are made on contract currency and on US dollar base.

ㅇThe Laspeyres formula is used to aggregate basic commodity indices with weights based on 2005 shipment values. The base year is changed every five years in order that The Export/Import Price Indexes can reflect changes in trade structure and improve the weight structure.

6. Notes

― The Export/Import Price Indexes are compiled on three bases : the Korean Won, contract currency and the US dollar. Hence, the base currency needs to be checked first.

― The Export/Import Price Indexes may show movements different from Export Import Unit Price Indexes, which measure the average unit price indexes of various customs cleared export and import items with different qualities.

Stage-of-Processing Price Index during November 2010

□ Prices of raw materials and intermediate materials increased by 1.4%

month-on-month in November 2010.(up 7.6% year-on-year)

o Prices of raw materials : 2.1%(Month-on-month), 11.8%(Year-on-year)

o Prices of intermediate materials : 1.2%(Month-on-month), 6.8%(Year-on-year)

□ Prices of finished goods decreased by 0.4% month-on-month in November 2010.(up 3.8% year-on-year)

o Prices of capital goods : -0.1%(Month-on-month), -0.1%(Year-on-year)

o Prices of consumption goods : -0.6%(Month-on-month), 5.1%(Year-on-year)

Stage of Processing Price Index

(rate, %)

Weight Month-on-month Year-on-year

Sep'10 Oct Nov Sep'10 Oct Nov

Raw materials &

intermediate

materials 673.54 0.3 -0.1 1.4 6.5 7.4 7.6

Raw materials 93.26 0.3 -0.8 2.1 16.8 14.2 11.8

Intermediate

materials 580.28 0.3 0.1 1.2 4.4 5.9 6.8

Finished goods 326.46 2.3 -1.0 -0.4 4.6 5.1 3.8

Capital goods 88.53 0.2 -0.6 -0.1 -0.7 -0.3 -0.1

Consumption

goods 237.93 3.1 -1.1 -0.6 6.7 7.2 5.1

Total index 1000.00 0.9 -0.3 0.9 5.9 6.8 6.5

Stage of Processing Price Index

Changes in Stage of Processing Price Index

<Ref.>

Significance of Stage of Processing Price Index

― Stage of processing price index is an index of the price movements of domestically supplied goods at the different stages of processing (raw materials, intermediate goods and finished goods) measured in an attempt to grasp the evolutionary process of price fluctuations.

― The stage of processing price index, embracing all domestically supplied commodities, is compiled by aggregating the commodities sector of the Producer Price Index and all sectors of the Import Price Index.

o The weights of domestic goods and imported goods mark 719.81 and 280.19, respectively. This shows that imported goods account for 28% of total goods.

o The weights of raw materials, intermediate goods and finished goods register 93.26, 580.28 and 326.46, respectively. The weight of intermediate goods, consisting of materials and components, accounts for more than half of total goods.

― The stage of processing price index is compiled in major advanced countries, including the U.S., Japan and Canada. This index is particularly useful for analyzing the evolutionary process of price fluctuations, since separate indexes are calculated for raw materials, intermediate goods and finished goods.

o The raw material and intermediate goods indexes are used for ex-ante inflation indicators, and the finished goods index is used as an aggregate indicator for measuring inflation in the goods sectors.

- In the U.S., in particular, the finished goods index, including capital goods, is highlighted as one of the inflation-measuring indicators.

o In Korea, the finished goods index shows a similar trend with the Consumer Price Index, but since it includes capital goods sectors and excludes service sectors, unlike the CPI, large scale fluctuations in capital goods or service prices will cause the finished goods index to show different movements than the CPI.

Coverage of the Major Price Indices Producer Price Index Import Price

Index Export Price Index Commodities Domestically produced

and consumed Commoditie Imported

Commodities Exported Commodities Services Domestic Services Stage-of-Processing Price Index

(Shaded Area)