Both export prices and import prices fell by 0.5% and 0.6% respectively over QIV. The market was anticipating a smallerfall in export prices of 0.2%.and a solid lift in import prices of 2.0%. Through the year, export prices rose by 6.2% whileimport prices lifted by 5.2%. The QIV international trade data allows us to calculate the implied terms of trade for theDecember quarter. On our estimate, the terms of trade was flat over QIV and crept 1.0% higher through the year.
The decrease in export prices reflected weaker commodity prices over the period, notwithstanding the continued softeningof the Australian dollar (AUD) over HII 2013. The decrease was driven mainly by falls in the prices received for non–monetary gold, (excluding gold, ores and concentrates) (–6.1%), coal, coke and briquettes (–3.7%), and cereals and cerealpreparations (-4.9%). These decreases were partly offset by rises in the prices received for petroleum products and relatedmaterials (+3.1%), and for metalliferous ores and metal scrap (+1.9%).
The decrease in import prices of 0.6% in QIV was driven primarily by the appreciation of the AUD versus major tradingpartners (although it eased against the USD) in QIV. On a sector basis, the import price index fell mainly due to falls in theprices paid for medicinal and pharmaceutical product (-3.4%), telecommunications, sound-recording, reproducingapparatus and equipment (-2.5%), and gold, non-monetary (excluding gold ores and concentrates) (-5.4%). Thesedecreases were partly offset by rises in the prices paid for petroleum, petroleum products and related materials (+3.4%)and other transport equipment (+8.5%).
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Commonwealth Bank