FED: Import prices plunge as dollar regains strength

AAP General News (Australia)
04-23-1999
FED: Import prices plunge as dollar regains strength

By Liz Rudall, Economics Correspondent

CANBERRA, April 23 AAP - Import prices took their biggest quarterly fall in almost three
years in the opening months of 1999 as the Australian dollar regained some strength, new
figures today found.

The Australian Bureau of Statistics (ABS) import price index fell by 2.1 per cent in the
March quarter, on the back of a one per cent fall in the December quarter.

The March quarter result is the biggest quarterly drop since the June quarter of 1996.

"The appreciation of the Australian dollar against most other currencies, along with lower
prices for petroleum products, contributed to the fall in the index in the March quarter," the
bureau said.

The result points to low inflation outcome, reducing the pressure on interest rates.

The ABS said prices fell in all categories, with the biggest slump an 11.4 per cent fall in
mineral fuels prices followed by commodities and transactions (down 3.9 per cent), chemical
products (down 3.6 per cent) and animal and vegetable oils (down 3.3 per cent).

However, the index was 2.1 per cent higher than a year earlier.

The results follow figures released yesterday which found that export prices also plunged
in the first quarter of this year, due to the stronger Aussie dollar combined with world
market conditions.

The export price index plunged 3.9 per cent in the March quarter, to be 6.3 per cent down
from a year earlier.

The result marked the second consecutive quarterly fall in the index, after the index
dropped five per cent in the December quarter.

Today, the bureau also said its index for manufacturing input prices fell by 1.5 per cent
in the quarter, bringing it 1.9 per cent lower than a year ago.

Price falls for crude oil and copper were the main reasons for the fall in the index, which
measures prices for materials used in the manufacturing industries.

The overall decrease was partly offset by increased prices for livestock, with pig, cattle
and sheep prices increasing mainly due to a shortage of supply, the bureau said.

In other surveys, the ABS found prices of materials used in coal mining fell for open cut
mining in the March quarter. For underground mining, prices remained flat.

Meanwhile, a snapshot of the economy also released by the ABS today found Australia's
estimated net worth hit $2,278 billion at the end of 1997/98, climbing 6.8 per cent from the
previous year.

The net worth measures the difference between total assets and total liabilities, including
shares.

The survey also pointed out that household net savings had plunged, down to two per cent in
1997/98 from 12.1 per cent of gross domestic product (GDP) in 1974/75.

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KEYWORD: ECONOMY NIGHTLEAD

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