Price competitiveness

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The Bank of Italy calculates, for 61 countries, a set of price-competitiveness indicators built as the ratio of the manufacturing producer price index for each country, denominated in a given currency, to a weighted average of the corresponding indices, denominated in the same currency, for its main competitors on the international markets. Therefore, an increase in the indicator signals a worsening in price-competitiveness.

Three sets of indicators are calculated: a) those measuring import-weighted price competiveness (i.e. the ability to compete with imports on the domestic market); b) those measuring export-weighted price competiveness (i.e. the ability to compete with other exporters and local producers on foreign markets); and c) those measuring overall price competiveness (i.e. import- and export-weighted competitiveness combined).

Only for export-weighted competitiveness indicators, we also provide separate indicators by outlet market, distinguishing between two markets: euro-area versus non-euro-area. Both indicators capture the competitive pressures arising from all the trading partners considered (60 for each country), but only considering the specific reference market.

Only for the overall competitiveness indicators (i.e. import- and export-weighted competitiveness combined), we provide a separate calculation on the basis of two subsets of trading partners: euro-area countries versus other trading partners. These two indicators focus on the competitive pressures arising from the specific subset of trading partners, with no limitations regarding the reference markets;

Each price-competitiveness indicator can be broken down into a component connected to the performance of nominal exchange rates (the nominal effective exchange rate) and a component linked to relative prices between countries. For the main indicators, we also provide the series for the nominal effective exchange rate, from which the series for relative prices can be obtained.

The price-competitiveness indicators are released for 12 countries as follows: a) the sole overall competitiveness indicators in the 'Balance of Payments and International Investment Position' report; b) all the other indicators in an Excel file.

All the time series are available beginning in January 1992 and are updated monthly.