28.24. Integration of the statistical production process and index calculation. As the compilation of foreign trade indices can reveal the presence of outliers by decomposing value trends into their price and quantity components, it is good practice to allow for the compilation process of trade indices to feed back into the compilation of raw data and vice versa.
28.25. Need for integrated economic statistics. In most countries, there is less than complete compatibility between the coverage, methods, classifications and adjustments of price index numbers in external trade and domestic indexes, even if these indices must be related if the mechanism of transmission of inflation across national boundaries and the way in which domestic prices are set are to be properly understood. It is therefore important to develop integrated economic statistics based on common statistical business registers which allow the linkage of customs declarations data with information gathered from surveys, tax records and other direct and indirect sources of information.
28.26. International comparability of external price indices. Governments as well as the business community show considerable interest in monitoring the performance of their countries vis-à-vis commercial competitors in international markets. While changes in a country's competitive position may be gauged from an analysis of its market shares, one of the key explanatory variables of the change in such shares is the measure of the evolution of relative prices across countries. This highlights the need for countries to compile and make available (in terms of a common currency) mutually consistent measures of price changes for the traded commodities at matching levels of detail.
28.27. Role of international economic classifications. While the commodity classifications for the compilation of export and import indices normally follow external trade classifications (HS or SITC), special emphasis should be directed to linking them to those of domestic-price indices, in particular CPC and related national classifications.
28.28. Use of foreign price indices. Foreign price indices could also be used as a “second best” measure in some special circumstances. For example, if a country's economy is highly interconnected with that of another country, there may be specific commodity groups for which they can be considered to constitute a single market, with purchasers in both countries facing approximately the same price movements. If this hypothesis is reasonable, the producer price index of a foreign, closely related economy can be used as a proxy for the price index of imports from that country. Nevertheless, it is important to emphasize that foreign price indices are only an “indirect” second-best way to measure variation of prices of internationally traded goods, and their linkage is generally imperfect and its accomplishment is difficult.