NZ terms of trade fall less than expected, down 0.9pc

New Zealand's terms of trade fell a smaller than expected 0.9 per cent in the December quarter, as import prices rose more than export prices.

The median forecast among economists polled by Reuters had been for a decline of 2 per cent from the September quarter.

Statistics New Zealand, which published the data today, said import prices rose 3.4 per cent in the quarter, while export prices were up 2.5 per cent.

The most significant contribution to the overall rise in export prices came from a 6.5 per cent lift in food and beverages. A 31.6 per cent fall in the petroleum and petroleum products index was the largest downward contribution to export prices.

The rise in import prices was partly driven by higher prices for mechanical machinery, SNZ said.

The depreciation of the NZ dollar made a significant contribution to the rise in total import prices, but a 22.4 per cent fall in petroleum and petroleum products largely offset the rise.

The fall in the terms of trade means that 0.9 per cent less imports can be funded by a fixed quantity of exports than in the September quarter.

Export volumes were down a seasonally adjusted 1.8 per cent in the December quarter, with petroleum and petroleum products down 17.5 per cent and forestry products down 5.7 per cent.

Seasonally adjusted import volumes fell 4.8 per cent, with passenger cars down 27.1 per cent and capital goods down 7.7 per cent.

- NZPA