KEY POINTS:
New Zealand's commodity price gauge fell by a record 7.4 per cent to an 18-month low in October.
The ANZ Commodity Price Index had its largest decline last month since it was launched in 1986, and was down nearly 11 per cent on a year earlier.
Nine of the 13 commodities recorded lower world prices in October.
Beef had the largest fall, down 17.7 per cent from September, followed by skins (16.2 per cent), aluminium (down 16 per cent) and wool (down 12.6 per cent).
Dairy prices had a smaller decline - down 9.9 per cent - but dominated the index.
The fall in dairy prices reflected softer commodity prices in general as investors lost confidence amid world market and economic turmoil.
Also depressing dairy prices was increased production from "fringe" dairy exporting nations, such as the United States, which were starting to increase production, said ANZ economist Steve Edwards.
"We've seen continued weakness in dairy, and so we would expect at least another month of decline.
"Should the global economy slow sufficiently, that will certainly have a bearing on the direction of commodity prices, on the downward side," Edwards said.
Consumers should start to see the benefit of lower dairy prices, although the price falls for beef were in part due to one-off factors, he said.
Kiwifruit prices rose 1.9 per cent, export apple prices rose 0.7 per cent, and seafood rose 0.3 per cent, while venison was unchanged.
The New Zealand dollar index rose 0.7 per cent in October to sit just below a record high, as a decline in the kiwi outstripped the fall in world commodity prices.
- NZPA
