Export & import prices; CBA-RAI Regional Movers Index

The prices of imported goods rose by 5.4 per cent in the September quarter – the most in 8 years – to be up by 6.4 per cent on the year.

The prices of exported goods lifted by 6.2 cent in the quarter to be up by 41 per cent on the year – the strongest annual growth rate in 12½ years. We expect a small increase in the terms of trade to near record highs in the quarter.

The CBA-RAI Regional Movers Index, which measures the number of people from capital cities moving to the regions, rose by 2 per cent in the September quarter to 115.9 points to be up 3 per cent on a year ago.

International trade prices – September quarter

· The second tranche of September quarter inflation data was released today. The lift in import prices reinforced the trend towards higher prices and rising cost pressures across the Australian economy, as supply-side bottlenecks and capacity constraints persist during the pandemic. The lift in the prices of imported consumer and industrial-related goods prices could pressure profit margins for Aussie companies with rising supplier costs potentially being passed on to consumers in the form of higher prices.

· So what does this mean for Aussie consumers? Well, prices of imported consumer goods rose by a solid 4.1 per cent in the September quarter. Prices of textiles, clothing & footwear (up 6.7 per cent) rose by the most, followed by food & beverages (up 6 per cent), household electrical items (up 4.1 per cent), and toys, books & leisure goods (up 3.3 per cent). So it appears that Christmas presents could be more expensive as Aussies emerge from Delta lockdowns.

· Higher relative prices for exports compared with imports is also serving to lift income levels in Australia with Australia’s terms of trade likely hitting record highs in the September quarter. The energy crisis in Europe, China and India is boosting demand for our largest exports, including coal and natural gas. Surging commodity prices have boosted Aussie export prices by the most since the Chinese commodity boom in early 2009.

· Import prices rose by 5.4 per cent in the September quarter, the most in 8 years. And prices are up by 6.4 per cent on a year ago – the strongest annual growth rate in 2½ years – as the Aussie dollar depreciated against the greenback.

· The primary contributors to rising import prices in the September quarter, included: Fertilisers (up 42.6 per cent); iron and steel (up 18.7 per cent); textiles and fabrics (up 13.6 per cent), petroleum-related products (up 12.2 per cent) and motor vehicles (up 2.7 per cent).

· Export prices lifted by 6.2 cent in the quarter to be up by 41 per cent on the year, the strongest annual growth rate in 12½ years.

· The main contributors to rising export prices in the September quarter, included: Coal (up 48.1 per cent), natural gas (up 39.5 per cent), non-ferrous metals (up 17.1 per cent), petroleum-related products (up 12 per cent) and meat (up 10.3 per cent). But iron ore prices fell by 12.8 per cent.

Commonwealth Bank (CBA) and Regional Australia Institute (RAI) Regional Movers Index – September quarter

· There has been a regional renaissance during the Covid-19 pandemic. In fact, regional Australia has underpinned Australia’s economic recovery, supported by fewer lockdowns, favourable agricultural growing conditions, bumper grain harvests, elevated soft commodity prices and strong overseas demand for rural exports.

· With international borders closed and persistent lockdowns in capital cities, ‘city slickers’ have moved to the regions in record numbers over the past 18 months. A desire for a ‘sea and tree’ change, the rise in remote working, preferences for bigger houses and land, and stronger labour market conditions have attracted urban dwellers to regional areas.

· Each quarter the CBA and RAI jointly issue the Regional Movers Index, using CBA data from relocations amongst its 10 million customers, to identify population movements and growth trends between Australia’s regions and capital cities.

· In the September quarter, the Regional Movers Index, which measures the number of people from capital cities moving to the regions, rose by 2 per cent to 115.9 points. At the end of September, the Index was 3 per cent higher than a year ago.

· A breakdown of total internal migration showed that people moving from capital cities to regional areas represented 6.2 per cent of all movers at the end of September, unchanged from 12 months ago. But over the past six months to September, the share of people moving from regional areas to capital cities eased from 4.2 per cent to 3.9 per cent. Overall, regional net migration lifted 14 per cent in the September quarter and stands just 8 per cent below the index peak in September 2020.

· Interestingly, the Aussie regions recording the largest growth in metro-movers over the 12 months to September 2021, were smaller local government areas (LGAs). Of course, relatively ‘Covid-free’ LGAs enjoyed the biggest spike in population growth, including: Wattle Range SA (up 83 per cent), Douglas QLD (up 71 per cent), Port Augusta SA (up 55 per cent) and Western Downs QLD (up 52 per cent).

· But regional coastal centres near Australia’s heavily populated east coast capital cities attracted the biggest share of capital city migrants in the September quarter. The Gold Coast QLD (11 per cent) was the most popular destination for city dwellers over the year to September. But the Sunshine Coast QLD posted the strongest annual growth rate in migration from capital cities (up 16 per cent). And both Lake Macquarie NSW (up 17 per cent) and Greater Geelong (up 8 per cent) recorded the strongest quarterly growth rates as Sydneysiders and Melburnians flocked to the regions to escape prolonged Delta lockdowns.

Originally published by Ryan Felsman, Senior Economist, CommSec