Australian export prices recorded their largest-ever quarterly rise in the second quarter, as relentless demand for the country’s mineral resources shows no sign of cooling.

But a smaller-than-expected rise in import prices could lead to slight downward risk to second-quarter consumer price data due Wednesday, some analysts said.

The price index for exports rose 13.5% in the second quarter from the first quarter, while the price index for imports rose 1.4% last quarter from the first quarter, the Australian Bureau of Statistics said.

The surge in export prices, the most since records began in the September quarter 1974, was largely expected, as Australia undergoes its biggest terms of trade boost in fifty years.

The number will likely serve as a timely reminder of the Reserve Bank of Australia’s battle against rampant inflation.

“The smaller-than-expected rise in import prices excluding fuel suggests there may be some downside risk to the PPI and the tradeables component of the headline CPI next week,” Australia and New Zealand Bank economist Riki Polygenis said.

The producer price index for the second quarter is due Monday.

JP Morgan Chief Economist Stephen Walters concurred, but said the overall impact will be slight.

“In terms of the CPI impact for next week, it’s pretty minimal.”

Rises in fuel and fertilizers contributed to the increase in the import price index but were offset by falls in prices paid for office machines and non-monetary gold.

Coal, coke, briquettes, metal scrap, metalliferous ores and fuel-related products contributed to the increase in the export price index, the ABS said.

RBC Capital Markets economist Su-Lin Ong said the export price index underscores dim prospects for an RBA rate cut anytime soon.

“From our perspective the terms of trade is a key factor arguing against speculation over rate cuts by year end.”

The RBA has already flagged its fears that higher export prices mean it is on guard for any stoking of demand, as energy exporters have already agreed to huge increases in prices with clients in emerging economies.

Source: http://www.djnewswires.com/eu

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