Terms of trade measures the purchasing power of New Zealand’s exports abroad and is an indicator of the state of the overall economy.
The rise in export prices in the June 2018 quarter was led by a 3.2 percent increase for dairy products. Milk powder exports led the increase, with most other dairy products also increasing over the quarter. Seasonally adjusted dairy volumes rose 5.2 percent over the quarter.
Meat prices also contributed to the rise in export prices, up 3.6 percent to reach its highest ever level. This followed a fall of 2.5 percent in the March 2018 quarter. Seasonally adjusted meat volumes increased 4.7 percent over the quarter, and values were up 3.7 percent.
Import prices rose 1.7 percent in the latest quarter, led by a 10 percent increase for petroleum products. This rise was led by crude oil (up 14 percent). Crude oil prices are at their highest level since the December 2014 quarter. The volume of crude oil in the June 2018 quarter fell 35 percent, while the value fell 26 percent.
“The Marsden Point refinery maintenance shutdown during the June quarter led to the fall in volume of crude oil imported,” business prices manager Sarah Johnson said.
“The amount of diesel and petrol imported during the June quarter was up to cater for the shutdown.”
The Reserve Bank trade weighted index fell 1.5 percent in the June 2018 quarter, with the New Zealand dollar weakening against most major currencies.
“A falling New Zealand dollar has an upward effect on export and import prices and their New Zealand-dollar values,” Mrs Johnson said.
