Import/export prices up in March qurter

Thursday 1 May 2014

The MSM is a little excited about this today. From BS:

Export prices rose by 3.6 per cent and imports by 3.2 per cent in the quarter. Both were 2% or so ahead of expectations.

If you’re confused given our collapsing terms of trade, don’t be! The currency fell heavily between Q4 last year Q1 this year and that’s boosted both export and import prices for a net effect of not much.

What matters far more is the terms of trade, which is the the ratio between export and import prices. It is it that which determines our pricing power and income.

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.