What Are the Import and Export Price Indexes (MXP)?

The import and export price indexes (MXP) measure changes in the prices of non-military goods and services coming in and out of the United States.

MXPs are published for many different types of commodities, goods and service industries, location of origin, and location of destination. The indexes are updated once a month and are produced by the Bureau of Labor Statistics' (BLS) International Price Program (IPP).

Key Takeaways

  • The import and export price indexes (MXP) measure changes in the prices of goods or services purchased from abroad by U.S. residents (imports) and sold to foreign buyers by U.S. residents (exports). 
  • The indexes are updated once a month by the Bureau of Labor Statistics' (BLS) International Price Program (IPP).
  • The data is used to deflate government trade statistics, predict future inflation and price changes, set fiscal and monetary policy, measure exchange rates, negotiate trade contracts, and identify specific industry and global price trends. 
  • Investors pay careful attention to price trends because inflation is generally bad for both bond and equity markets.

How Import and Export Price Indexes (MXP) Work

The MXPs are created by compiling the prices of goods purchased in the U.S. but produced outside of the country (imports), and the prices of goods purchased outside of the country but produced in the U.S. (exports). Data is collected from exporter declarations and entry documents of imported goods.

The BLS defines its indexes as "containing data on changes in the prices of non-military goods and services traded between the U.S. and the rest of the world." These measures, it adds, "show how prices of a market basket of goods and services in international trade change from one period to the next."

Not all U.S. international trade is conducted in U.S. dollars (USD). The BLS says 6% of imports and exports currently surveyed are priced in foreign currencies. For its indexes, all prices are converted to the local currency, using an average exchange rate from the month prior to the pricing month.

Import and export price changes from the previous month are usually published by the middle of the following one.

How Import and Export Price Indexes (MXP) Are Used

The MXP serve many purposes. Among other things, they can be used to:

  • Deflate government trade statistics: Because trade statistics are reported and aggregated in nominal dollar terms, analysts can use MXPs to convert them into real values.
  • Predict future prices and domestic inflation: The prices of some consumer goods may in part depend on the cost of imported goods or raw materials used in their domestic production.
  • Help the Federal Reserve Board (FRB) decide which fiscal and monetary policies to implement: Tracking trade flows and the expected future course of domestic inflation are both important considerations in setting policy.
  • Measure exchange rates and negotiate trade contracts: MXPs can be used to estimate or set exchange rates and currency exchange price escalation factors for trade agreements and contracts.
  • Identify specific industry and global price trends: MXPs for different industries, goods, or countries of origin can be used to help identify trends across these different dimensions.

The MXPs are one of three major measures of change in the prices of goods and services in the U.S. economy. The others are the consumer price index (CPI) and producer price index (PPI).

The Import and Export Price Indexes (MXP) and Investing

MXPs can help to identify price and inflation trends, which are important factors in investment markets and, as such, worthwhile for investors to keep tabs on.

Data from these indexes often has a direct impact on bond markets. The indexes are used to help measure inflation in products that are traded globally. Bond prices will often decrease when importing inflation becomes too high because it erodes the value of the original investment.

Inflation can also hurt equity markets. As inflation increases, central banks sometimes raise interest rates to curtail rising prices. Higher interest rates make it more expensive to borrow money and encourage consumers to save. Often, the upshot is falling stock prices.