Exchange-rate pass-through is the effect that when the international market changes so that a country's currency changes in value relative to others (the exchange rate), it will also affect prices within that country's economy (it "passes through").
Complete pass-through would mean that the change in exchange rate is directly tied to the change in local prices---if the dollar becomes 1% more valuable in international markets, prices will become 1% lower within the US. This almost never happens.
Incomplete pass-through is what actually occurs: Only part of the exchange rate change is reflected in local prices. Sometimes it's a large portion, close to complete pass-through; but usually it's a very small portion.
In fact as the papers I've linked show (be warned, they're actual peer-reviewed economics literature, so they are quite advanced), exchange-rate pass-through is so incompleteit's actually a bit of a mystery. It makes sense for a big rich country like the US; but even tiny poor countries like Nicaragua still see only very weak pass-through of their exchange rates. Something is in effect "shielding" local prices from international exchange rate changes.
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