KEY POINTS:
The trade deficit was an unexpectedly large $334 million last month, as a surge in oil exports was swamped by the importation of an oil platform.
For every $1 of exports there was $1.09 of imports, the highest that ratio has been in any April since 1982.
However the monthly numbers are blown around by irregular shipments of oil from the Tui field - $311 million last month, but only $130 million in March - and by lumpy import items, like an oil platform last month.
Taking the three months ended April (to smooth through some of that volatility) the trade deficit was $134 million. Excluding large import items, the underlying balance would have been a $175 million surplus.
Exports at $10.9 billion were 17 per cent higher than the same period in 2007 while imports at 11.1 billion were 15 per cent higher.
Oil exports were $519 million higher than in the same period last year, enough to cover a $499 million increase in the oil import bill. But the largest increase in exports was in dairy products, up $719 million.
On the import side, while capital goods imports were up 28 per cent on the same period last year, imports of consumer goods were up a more modest 4.2 per cent.
For the year ended April the trade deficit was $4.6 billion, up from $4.5 billion in the year ended March.
Oil from the Tui field has mitigated the impact of soaring world oil prices on the trade accounts, but as an oil importer New Zealand cannot escape their impact on growth and inflation.
The relentless rise in oil prices is one of the reasons First NZ Capital economist Jason Wong believes the country is now in a recession (its second consecutive quarter of contraction) and that inflation could hit 4.7 per cent later in the year.
"The recent surge in oil prices is having a significant impact on confidence and spending across the economy, of both households and businesses," he said.
Tight monetary conditions could take some of the blame, with some borrowers facing increases of close to two full percentage points as they rolled off the more favourable mortgage rates of two years ago.
"Other villains equally responsible are the impact of the drought and and strong increases in food and petrol prices, which have diverted funds away from discretionary spending, given very tight budgets."
Wong expects the next two inflation readings to be very high, 1.4 per cent in June and 1.3 per cent in September, which would push the annual rate to 4.7 per cent.
The Reserve Bank is entitled to "look through" the direct impact of petrol prices on the inflation rate, but it cannot disregard the spillover effect on the prices of other goods and services or the impact on already high inflation expectations.
"In a relatively tight labour market wage negotiations factor in the higher cost of living almost automatically," he said.
