An 8.2% drop in export prices in the March quarter was the largest quarterly fall since December 1957, Statistics NZ said.
This was mainly driven by a fall in dairy product prices which were down 20.5 percent. The other main contributor to the fall in export prices was a 28.0 percent fall in petroleum and petroleum products due to lower export prices for crude oil.
Import prices also fell – down 5.4% in the March quarter. But when the price of petrol and petrol products which dropped 35.8% are excluded, the price of imports increased by 2.8%.
The terms of trade fell 3.0 percent in the March 2009 quarter as merchandise export prices fell more than import prices. This is the largest fall in the terms of trade since the June 2002 quarter. The latest fall in the merchandise terms of trade means that in the March 2009 quarter, 3.0 percent less merchandise imports could be funded by a fixed quantity of merchandise exports than in the previous quarter.
While prices fell, seasonally adjusted export volumes increased by 2%, the first rise since the December 2007 quarter. Dairy products were the main contributor this.
While export voumes rose, the seasonally adjusted import volumes fell 9.8 percent in the March, putting them at their lowest level since the December 2004 quarter.
The fall in export prices while volumes increased means we’re selling more for less which isn’t a recipe for economic growth.
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