By Conall Mac Coille of the Bank's Structural Economic Analysis Division.
The share of UK imports from developing countries has increased sharply in recent years. Using measures of bilateral trade prices, this article suggests that increased sourcing from low-cost economies has put significant downward pressure on the relative price of UK goods imports. However, this effect may have dissipated over time as the prices of UK imports from low-cost economies have risen more rapidly than in the past and developing economies' increasing demand for raw materials has contributed to higher oil and commodities prices.
The impact of low-cost economies on UK import prices