Development of international trade in goods price indices in the Q1 2025 in Czech Republic

In the Q1 2025, compared to the Q4 2024, export prices remained unchanged. In the year-on-year (y-o-y) comparison, export prices increased by 2.3% in the Q1 2025. Import prices increased by 0.2% in the Q1 2025 compared to the Q4 2024. In the y-o-y comparison, import prices increased by 2.2% in the Q1 2025. The terms of trade reached the value of 99.8% in the Q1 2025 compared to the Q4 2024. In the year-on-year comparison, the terms of trade reached the value of 100.1% in the Q1 2025.

Export prices

Quarter-on-quarter (q-o-q; in the Q1 2025 compared to the Q4 2024), the export prices remained unchanged. The following increased the most significantly: prices of products of agriculture, hunting and related services by 5.3% and products of forestry, logging and related services by 3.0%. Prices of the following decreased the most markedly: other manufactured goods by 3.5%, electricity by 3.4%, and furniture by 2.5%.

Year-on-year, in the Q1 2025, the export prices increased by 2.3% (in the Q4 2024 by 4.1%). Prices of the following considerably increased: electricity by 37.7%, products of agriculture, hunting and related services by 10.8%, and wood and products of wood and cork, except furniture by 6.5%. Mainly prices of the following decreased: coke and refined petroleum products by 11.7%, waste collection, treatment and disposal services by 6.8%, and furniture by 3.0%.

Import prices

Quarter-on-quarter (in the Q1 2025 compared to the Q4 2024), the import prices increased by 0.2%. Especially the following increased: prices of coke and refined petroleum products by 4.4% and electricity by 4.3%. Prices of the following decreased rather markedly: paper and paper products by 2.0%, electrical equipment by 1.4%, and other manufactured goods by 1.0%.

Year-on-year, in the Q1 2025, the import prices increased by 2.2% (in the Q4 2024 by 2.2%). The most significant price increases were in electricity by 38.1%, beverages by 14.1%, and crude petroleum and natural gas by 9.5%. Significant decreases were in prices of coke and refined petroleum products by 10.3%, other transport equipment by 2.2%, and leather by 1.7%.

The terms of trade

Quarter-on-quarter (in the Q1 2025 compared to the Q4 2024), the terms of trade reached the value of 99.8%. An important negative value of the terms of trade was reached by prices of electricity (92.6%) and a positive value mainly by prices of paper and paper products (102.4%).

Year-on-year, in the Q1 2025, the terms of trade reached the value of 100.1% (in the Q4 2024 the value was 101.9%) and for the ninth quarter they remained in the positive values – see the Chart No 2. A significant positive value of the terms of trade was recorded by prices of paper and paper products (102.9%) and a negative value mainly by food products (94.1%).

The international trade in goods (change of ownership) price development was also significantly influenced by the CZK exchange rate to the major foreign currencies. All monitored foreign currencies have been included in the quarter-on-quarter exchange rate index. Q-o-q indices of the CZK exchange rate to these foreign currencies were weighted by their respective weight, which pertains to those foreign currencies in the export price index and in the import price index (before the Q3 2023, only two most important currencies, i.e. EUR and USD, have been included; as of the Q3 2023, the calculation was refined by including all currencies and it was calculated backwards to the year 2021).

International trade in goods price indices, year-on-year, adjusted for exchange rate influence

The Czech Statistical Office (CZSO) also calculates year-on-year international trade in goods price indices adjusted for exchange rate effects. It is carried out as follows: prices in foreign currencies reported in the current month are converted to Czech crowns by the exchange rate of the same month of the previous year. Afterwards, they are used for the weighted mean calculation together with prices reported in CZK. This exchange rate adjusted base price index of a month is related to the non-adjusted base price index of the corresponding month of the previous year and thus the year-on-year adjusted price index for a month is calculated. Adjusted quarter-on-quarter price indices have been calculated similarly, too.

Differences between the adjusted and non-adjusted price indices may be considerable. They are obvious in the Charts Nos 6 and 7, for example, in the Q2 2021 and in the Q1 and Q2 2024.

The method employed does not enable to make a 100% exchange rate adjustment because not all trade transactions made in foreign currencies are also reported in foreign currencies; the proportion does not exceed 30%. It follows therefrom that at the full exchange rate adjustment, differences between the published price indices and the exchange rate adjusted price indices would probably further increase.

The exchange rate adjusted indices described above can also be used to make the exchange rate adjusted breakdown of increments of price indices. The Table 1 gives the published and exchange rate adjusted breakdown of increments of export and import price indices. The breakdown illustrates well how many percentage points each of the groups “exchange rate contributed” to the index.

It holds true in general that the exchange rate effect decreases the price indices in international trade in goods if CZK is strengthening to foreign currencies in total. And, vice versa, the exchange rate effect pushes the price indices up if CZK is weakening to foreign currencies in total.

In the Q1 2025, the exchange rate effect increased, year-on-year, both the export price index and the import price index. Export prices were increasing faster than the import ones and therefore the terms of trade reached the positive value, year-on-year. After the elimination of the exchange rate effect, the terms of trade reached the same value as the published terms of trade. The values free of the exchange rate effect correspond to the exchange rate adjusted indices

Source: CZSO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.