1 Sep 2015

Terms of trade up but expected to drop

2:02 pm on 1 September 2015

Higher dairy prices have helped lift New Zealand's purchasing power with the rest of the world.

Organic Jersey cow on a Rongotea farm.

Photo: RNZ / Alexander Robertson

Official figures show the terms of trade, which measures the amount of imports that can be bought with a given amount of exports, rose 1.3 percent in the three months to June, due to export prices rising faster than import prices.

Exports rose 2.1 percent, driven by higher dairy, wool and fish prices.

Import prices rose 0.7 percent, led by petroleum products.

Excluding dairy, export prices fell about 0.1 percent.

Export volumes declined 0.2 percent on the back of drops in dairy and meat, while import volumes fell 0.4 percent.

Statistics New Zealand said although dairy prices rose, helped by a weaker dollar, they were 28 percent lower than in the March quarter last year.

Dairy auction prices have fallen sharply since March, but ASB Bank rural economist Nathan Penny said those prices would not show up in trade data for about three months.

Mr Penny expected the terms of trade to resume falling over the second half of this year.

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