Terms of trade continue to plummet


Australia's terms of trade have continued their downward spiral, tumbling another 5 per cent in the December quarter.

Key points

Terms of trade down 5 per cent in December quarter
Down more than 50 per cent from the peak in 2011 and 30 per cent below the long term average
Fall in export prices and rise in import prices reducing Australian household disposable income
The terms of trade are now at a decade low, down more than 50 per cent from the peak in 2011 – and 30 per cent below the long term average – representing a significant decline in the purchasing power of Australian households.

The terms of trade – the ratio of export prices to import prices – were again driven down by collapsing prices and demand for key resources, a dynamic that has been in play for almost three years.

Export prices fell on average 5.4 per cent over the quarter and were down more than 10 per cent over the year.

Import prices were relatively stable, down just 0.3 per cent over the quarter, but 2.4 per cent higher over the year largely due to the falling Australian dollar.

Commonwealth Bank economist Gareth Aird said plunging hard commodity prices, due to softening Chinese demand and increased global supply, continue to hammer Australia's export prices and crimp national income growth.

"Most notably, falls in commodity prices have weighed heavily on mining company profits and government revenue," Mr Aird noted.

Iron ore prices fell 9 per cent over the quarter, while coal was down 6 per cent and LNG dropped 4 per cent.

Mr Aird said the result meant that real gross domestic income is likely to again fall in the quarter, dragging down the nation's purchasing power.

Declines of 10 per cent in the terms of trade in both 2014 and 2015 have been associated with particularly weak growth in nominal income.

Real net disposable income – a key measure of living standards - has fallen for six consecutive quarters and has put considerable pressure on household budgets and consumer spending.

http://www.abc.net.au/news/2016-01-28/terms-of-trade-continue-to-plummet/7121862

Great time for the Libs to want to lumber households with a bigger Tax on Everything.

Laugh till you cry wrote on Jan 28^th, 2016 at 3:59pm:


IF some of you people realised that you are NOT MIDDLE CLASS but WORKING CLASS and ceased and desisted trying to keep up with those earning more than you ever can .... then you might find your SLOT in Society.

There is nothing wrong with being "less well off" than those who went to University and so forth.  STOP trying to keep up the façade that EVERYONE in Australia is "Living Easy". 

Labor isn't in government ... the coalition are.
And living standards are crashing.

And Libs are going to the next election with a plan to attack living standards even more by increasing and expanding the GST.


How about commenting on the 'current' government Cods?

____ wrote on Jan 28^th, 2016 at 3:50pm:



Since when was Terms of Trade the same measurement as Standard of Living.

Greens, you need to stop smoking those drugs and start taking your medication again.

If I thought Labor could increase the price of coal, gas, iron, nickel,, stuff me, I would have voted for them.

Seriously you people are complete Drongos

mariacostel wrote on Jan 28^th, 2016 at 6:36pm:



Highlighted to assist in your comprehension.