World prices for a basket of export commodities fell for the third month in a row in August and this time the exchange rate was unable to cushion the blow.
Another sharp fall in apple prices was the main downward influence.
The key pastoral commodities held up at historically strong levels. Dairy prices edged higher but meat prices eased slightly.
The ANZ commodity price index fell 0.9 per cent last month to be only 2.1 per cent higher than a year ago. As recently as April it was still posting double-digit annual gains.
It was the third consecutive decline from the record levels in May.
The exchange rate, which on a month-average basis rose 2.4 per cent between July and August against the US dollar and to a lesser extent against other currencies, amplified the decline.
The ANZ's New Zealand dollar commodity index fell 2.6 per cent during the month to be 4.2 per cent down on a year ago.
"While commodity prices clearly look extended from a cyclical perspective, supply and demand fundamentals nevertheless look favourable," said ANZ chief economist John McDermott.
"But, equally, the impetus provided to the economy by rising commodity prices has passed, particularly with New Zealand's export commodities unable to keep pace with surging oil prices."
Aluminium recorded the largest rise last month (4.9 per cent) as prices climbed to about US$1900 a tonne.
Kiwifruit prices have managed to hold the gains of recent seasons, rising 4.2 per cent last month in the European market.
However apple prices tumbled 22.8 per cent to be 25 per cent lower than in the August last year.
ANZ said this year's deterioration had been more marked because of oversupply from other Southern Hemisphere producers and longer-life apples extending the European growing season.
Forestry prices were mixed. Timber was up 1.1 per cent but logs and wood pulp were back slightly.
Lamb prices fell 1.9 per cent but stayed at near-record levels 10 per cent higher than August last year.
Falling apples dent commodity index
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