Surging iron ore and coal prices drove export values almost 10 per cent higher, bolstering national income.

Strong prices also led to a 25.3 per cent growth in mining gross operating profits over the quarter, taking profits to almost 50 per cent above a year ago.

“The mining sector contributed half of the total profits in the quarter and more than the entirety of the quarterly increase,” Commonwealth Bank senior economist Belinda Allen said, offsetting falls elsewhere.

According to the Australian Bureau of Statistics, however, a jump in import volumes combined with a small fall in exports will wipe 1.7 percentage points from real GDP in Wednesday’s national accounts.

Australia’s account surplus narrowed significantly to $7.5 billion between January and March, lower than the market consensus of $13.2 billion, and down from a peak of $22.4 billion in the June quarter last year.

This was due to a smaller trade surplus and a widening of the net income deficit reflecting the higher flow of dividend payments overseas as profits continued to rise on the back of booming commodity prices.

ABS head of international statistics Andrew Tomadini said while the surplus had narrowed, the March quarter was the 12th consecutive account surplus, the longest consecutive period of surpluses since the 1970s,

KPMG senior economist Sarah Hunter also said the latest data contained the first glimpse of the impact of rising fuel costs.

“The cost of intermediate inputs (which captures fuels) [was] up 6.2 per cent on the quarter – further increases will come through in the June quarter data, as the full impact on contract prices feeds through,” Dr Hunter said.

Business inventories rose 3.2 per cent over the quarter and 3 per over the year, and CBA expects that will add 0.6 percentage points to GDP.

After adjusting for inventories, company profits rose by 4.7 per cent in the quarter to be 19.9 per cent higher over the year, according to CBA, which was almost entirely led by the mining sector.

Government spending over the quarter remained elevated, largely due to pandemic related healthcare expenditure and payments associated with the floods in Queensland and NSW.

“Overall the strength in both recurrent government spending as well as on the capex side will see the public sector again add to GDP growth in the quarter,” Ms Allen said.

The ABS estimates total public demand to contribute 0.7 percentage points to GDP in quarter one.