Australia: Import and export price index to stay in focus tomorrow - Westpac

The research team at Westpac, expects the Australian import price index to contract by 0.4% and export price index to surge by 6% in the first quarter.

Key Quotes

“In the March quarter, the price of imported goods most likely edged lower, down a forecast 0.4%. This continues the downward trend of late, to have prices 2% below the level of a year ago. Import prices weakened over the past year largely because of the partial rebound in the Australian dollar.”

“In Q1, the Australian dollar appreciated by almost 2% on a TWI basis to be about 7% higher than a year ago. However, higher energy prices in the period will provide a partial offset to the dampening impact of the stronger currency. Gasoline price rose by around 10% in the opening quarter of 2017, extending the rebound since mid-2016.”

“Export prices rebounded over the past year as commodity prices bounced off the lows prevailing early in 2016. The export price index rose by a forecast 6% in Q1, with upside risks, to be around 25% higher than a year ago. That would still have the export price index around 13% below the peak of late 2011.”

“Commodity prices made sizeable gains in the opening quarter of 2017, up 8.5% in AUD terms on the WCFI measure, and posting even stronger gains as measured on the RBA commodity price index. The terms of trade for goods, on these estimates, increases by around 6.5% in the quarter to be 28% above a year ago.”