This worked for me:-

in your launch.json profile entry, specify a new entry called "env", and set PYTHONPATH yourself.

"configurations": [
    {
        "name": "Python",
        "type": "python",
        "stopOnEntry": false,
        "request": "launch",
        "pythonPath": "${config.python.pythonPath}",
        "program": "${file}",
        "cwd": "${workspaceRoot}",
        "debugOptions": [
            "WaitOnAbnormalExit",
            "WaitOnNormalExit",
            "RedirectOutput"
        ],
        "env": {
            "PYTHONPATH": "/path/a:path/b"
        }
    }
]

I have a situation that I believe is relatively common. I want a script to import a module from another directory. My python project is laid out as follows:

~/project/
  |
  |---modules/
        |
        |---mod.py
  |---scripts/
        |---script.py

in script.py, I have from modules import mod. So my PYTHONPATH needs to be set to ~/project/ (something that PyCharm does automatically).

VSCode is a great editor, but everywhere else, it falls short, in my opinion. This is a perfect example of that.

I create a default launch.json file to "run the current file". A "cwd": "${fileDirname}" line has to be added to make things work like they do in PyCharm (FYI, a list of the built-in variables can be found here).

Debugging

For debugging (the "play" button on the sidebar, or the F5 key), the PYTHONPATH set in launch.json or your .env file takes effect. Note that in the .env file, you cannot use variables such as ${workspaceRoot}, but you can easily append or insert to the path by using the proper separator for your platform (; for Windows and : for everyone else).

Because I want to take advantage of that variable, I put this in my launch.json:

    "env": {"PYTHONPATH": "${workspaceFolder}${pathSeparator}${env:PYTHONPATH}"}

(Thanks to @someonr for the suggestion to use ${pathSeparator}.)

It appears that you can prepend/append to whatever is inherited from the environment (this is not true for settings.json; see below).

This will also work for the hotkey Ctrl+F5 (run without debugging).

For reference, here's the full file, which replicates what PyCharm does automatically:

{
    "version": "0.2.0",
    "configurations": [
        {
            "name": "Python: Current File",
            "type": "python",
            "request": "launch",
            "program": "${file}",
            "console": "integratedTerminal",
            "cwd": "${fileDirname}",
            "env": {"PYTHONPATH": "${workspaceFolder}${pathSeparator}${env:PYTHONPATH}"}
        }
    ]
}

Run in terminal

If I hit the "play" button that appears on the top right of the editor window (when a python file is the active tab), it will not work. This runs the current file in a terminal, which doesn't pay attention to launch.json at all. To make that work, you have to define PYTHONPATH in a settings.json file, by adding this:

    "terminal.integrated.env.osx": {"PYTHONPATH": "${workspaceFolder}"}

(Note there are different values for each platform.) If you've selected a python interpreter (e.g. from a virtual environment), you will already have a settings.json file in the .vscode directory. Mine looks like this:

{
    "python.pythonPath": "/Users/me/project/venv/bin/python3",
    "terminal.integrated.env.osx": {"PYTHONPATH": "${workspaceFolder}"}
}

You can't append or insert values into the inherited PYTHONPATH via the settings.json file. It will only take one string, and it will not parse separators. So even though you could get the value using ${env:PYTHONPATH}, you won't be able to do anything with it.

Moreover, you can't set the current working directory. Even though it would seem you could set it with "terminal.integrated.cwd": "${workspaceFolder}", it doesn't work. So if any of your scripts do anything with paths relative to their location in the tree, they won't work. The working directory will be your project root.

Note that any changes to the settings.json file will require that you exit the integrated terminal and restart it.

Linting

Nothing I do to launch.json regarding PYTHONPATH makes any difference to pylint, which will red-underline from modules import mod, despite the fact I can put the cursor on mod, hit F12, and the file opens. Snooping around linting settings, the defaults for mypy include --ignore-missing-imports. To replicate this behavior with pylint, add this to your settings.json:

    "python.linting.pylintArgs": [
        "--disable=F0401"
    ] 

Shame that we just have to work around this, but the autocomplete helps a lot when writing the import statements to begin with.

Conclusion

There are many layers to VSCode and it's hard to get things to work together. It seems multiple environments are floating around. In the end:

1. I cannot "run in terminal" because I can't set the current working directory to be the path containing the current file.
2. I cannot set PYTHONPATH for pylint as that runs in some environment different than the integrated terminal and whatever is controlled by launch.json, so I can only tell pylint to ignore import errors.
3. Running with F5 works if you set PYTHONPATH either via an .env file or in launch.json

I solved the issue and will post the answer here as it may help another poor devil trying to solve a similar issue.

The answer turned out to be quite simple. I created a powershell script under the \SysID folder named config.ps1 as:

# config.ps1  
$env:PYTHONPATH="$env:PYTHONPATH;$pwd\src\core" 
$env:PYTHONPATH="$env:PYTHONPATH;$pwd\src\utils" 
echo "Your PYTHONPATH variable has been set." 
echo "Its current value is $env:PYTHONPATH"

Everything I need to do is run this script in the same terminal VSCODE uses for the Python sessions. In case one resets or kills the terminal, it has to be called again.

Also, in order to prevent the syntax checking feature from telling me my imports are invalid, I added these lines to my settings.json file:

"python.analysis.extraPaths": [
  "./src/core",
  "./src/utils",
  "./src/app",
  "./"
]

All actions I described in my question were completely useless. All that had to be done was to set the PYTHONPATH environment variable by calling the config.ps1 script.

According to your description, it is recommended that you could try the following tips:

1. Add the line of settings to the launch.json file of .vscode file:

"env": {"PYTHONPATH" : "${workspaceRoot}"},

VSCode will automaticCally look in the root of the project.(the outermost household_prices),

then, VSCode will further look for the required file based on this line of code:

import household_prices.data.raw_data.

2. Create '__init__.py' file in folder household_prices(the Second floor), it will let VSCode know more accurately that a file is a package.

I have created a project with the same structure as your file, and after testing, I can successfully import the module.

My environment:python3.8.3; VSCode: 1.47.3; OS: Windows_NT x64 10.0.18362

Modify this setting:

File > Preferences > Settings > Python > Data Science > Execute in File Dir