Australia's Import Prices Rise More Than Expected

Australia's Import Prices Rise More Than Expected


Import prices in Australia rose more than expected in the June quarter with the weak dollar pushing up prices of fuel and pharmaceutics.
The Australian Bureau of Statistics said Friday that the import prices increased 2.4 percent quarter-on-quarter in the June quarter, following a 1.2 percent decline in the previous month. Economists were looking for a 1.5 percent increase.
According to the statistical office, the depreciation of the Australian dollar against all of the major trading currencies contributed to this increase.
The increase was also influenced by a 3.7 percent sequential rise in the prices paid for petroleum, petroleum products and related materials as well as a 3.3 percent rise in import costs of medicinal and pharmaceutical products.
Annually, the import price index rose 3.7 percent. This increase was driven mainly by rises in the prices paid for petroleum, petroleum products and related materials as well as gold.
The export price index rose 1 percent quarter-on-quarter compared to expectations for no change. Through the year to the June quarter 2012, the export price index fell 3.8 percent.
Commenting on the data, Westpac Institutional Bank said Australia's terms of trade retreated over the last three quarters, declining from a record high, as commodity prices weakened on softer global demand. A further softening of the terms of trade is likely during the third quarter, as the global downturn continues, it added.
The statistical office is expected to release the inflation figures for the second quarter on July 25. The Reserve Bank of Australia expects inflation, abstracting from the effects of the carbon price which came in to force on July 1, to be consistent with the target over the coming one or two years.
"Maintaining low inflation over the longer term will, however, require growth in domestic costs to slow as the effects of the earlier exchange rate appreciation wane," RBA Governor Glenn Stevens said during this month's Policy Board meeting.
During the meeting, the cash rate was left unchanged at 3.5 percent. The central bank has reduced the interest rate by a cumulative 125 basis points since November last year.

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