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Trade deficit narrowed in December

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A large fall in imports and rising commodity prices helped reduce Australia's trade deficit in December.

The trade deficit narrowed to $427 million in December seasonally adjusted, compared with an upwardly-revised deficit of $2.788 billion in November, figures released by the Australian Bureau of Statistics show.

The figures showed exports rose 3.0 per cent, while imports fell 6.0 per cent.

ANZ head of Australian economics Justin Fabo said the trade figures were better than expected.

"Overall it's a pretty good number, a pretty sharp improvement the trade balance," he said.

He said the fall in total imports was likely due to a sharp drop in imports of capital goods, which were notoriously volatile, during the the month.

A rise in commodity prices and exports of coal and iron ore would have contributed to the rise in total exports, he said.

"We know that volumes of coal and iron ore rose strongly in the month, we also know that the iron ore price was up strongly," he said.

Meanwhile, other figures released by the ABS on Tuesday showed Australian capital city house prices rose 1.6 per cent in the December quarter.