Wei Hao & Zhao Tianyuan: The Analysis on Pass-through Effect of Import Prices to Domestic Consumer Prices — Empirical Analysis Based on Commodity Classification and Panel Data

Release time:2019-01-15Author: Wei Hao & Zhao Tianyuan

This paper conducts an empirical analysis on the effects of changes in import prices of intermediate goods, consumption goods and resource goods on domestic consumer price indices of five kinds of commodities, which are food, cloth, medicine, transportation and household appliances. The results are as follows. A rise in the import prices of both resource and consumption goods leads to the rise of domestic consumer prices. Specifically, import prices of resource goods pass to domestic consumer prices through rising costs effect, while consumption goods through demand structure upgrading effect. The rise of import prices of intermediate goods has no certain effect on domestic consumer prices. However, heterogeneous effects exist in the pass-through of different intermediate goods. Import price of raw materials affects domestic prices through costs changing effect. Import price of equipment affects domestic prices through quality upgrading effect, cost shifting effect and efficiency improving effect. Therefore,our government should consider the features and nature of import goods when making targeted polices to deal with external shocks on domestic consumer prices.