The terms of trade reached the most favourable levels for more than 40 years in the March quarter as export prices rose and import prices fell.
The terms of trade is a measure of the international purchasing power of the country's exports. The latest rise, the fifth quarterly improvement in a row, means that 1.8 per cent more imports could be funded by a fixed quantity of exports than in the December 2013 quarter.
The terms of trade is now just 1.7 per cent off its all-time high 41 years ago, but that record may stand as the cumulative 23 per cent fall in dairy prices in Fonterra's fortnightly auctions since February has yet to be reflected in the prices of shipments crossing the wharves.
Despite a 1.8 per cent rise in the trade-weighted exchange rate, export prices rose 0.8 per cent in the quarter, to be 13 per cent higher than a year ago.
Meat prices rose 2.1 per cent in the quarter to be up 6.6 per cent for the year. The rise was influenced by higher prices for beef, Statistics New Zealand said, but venison and lamb also rose.
