1 Dec 2015

Terms of trade fall

1:07 pm on 1 December 2015

New Zealand's purchasing power with the rest of the world has fallen due to the lower dollar pushing up import prices.

no caption

Photo: 123rf

The terms of trade fell 3.7 percent in the three months to September, following a 1.5 percent rise in the June quarter. The terms of trade measures the amount of imports that can be bought with a given amount of exports.

The dollar fell 8.4 percent, its largest quarterly decline in nearly seven years, Statistics New Zealand figures show.

In response, import prices jumped 7.3 percent, the largest increase in seven years.

Prices for petroleum and machinery and plant contributed to most of the increase.

The lower dollar also stimulated export prices and volumes, though the gains did not rise as much as on the import side.

Exported goods rose 3.4 percent, with meat contributing to most of the increase.

Beef prices hit new highs, up by 10 percent, while dairy slipped slightly by 0.1 percent.

Export volumes rose 3.7 percent, with meat and dairy contributing to most of the increase, offseting a decline in forestry.

Some economists say the data indicates that net exports will make a decent contribution to gross domestic product for the September quarter, which is released on 17 December.