August 28, 2012
The rise in the price of imports has slowed considerably since the end of 2010. Whereas the year-on-year increase was no less than 12% in December 2010, it came to 3.7% in January 2012 and was just 1.3% in June.
One main driver of this development was a deceleration in the increase in imported energy prices resulting from the decline in commodity prices due to the global economic slowdown. The rise in the price of imported energy dropped from 17% yoy at the start of the year to 2% yoy in June 2012.
Dividing up imports by region reveals that for all main groups (excl. energy) the increase in the price of imports from within the euro area – where about 40% of imports come from – is much lower than for imports from the rest of the world. This is probably due in part to the softening of the euro, which is making imports from non-EMU countries more expensive. In addition, the improvement in price competitiveness in the euro-area’s peripheral countries is becoming increasingly tangible.
With imports from euro-area countries becoming relatively cheaper they are likely to experience stronger relative demand. While imports fell by a total of 0.2% yoy in May 2012, imports from euro-area countries increased by 0.1% and imports from non-EMU countries declined by 0.4%.