Higher New Zealand dollar keeps prices down

The appreciation of the New Zealand dollar was a major driver of the fall in merchandise import and export prices in the June 2007 quarter, Statistics New Zealand said today. A higher exchange rate has a downward influence on both import and export prices in New Zealand dollars.

The merchandise export price index fell 1.2 percent in the June 2007 quarter, the fourth consecutive quarter in which export prices have fallen. The non-food manufactures index (down 2.9 percent) was the most significant contributor to the overall fall, due to lower prices for chemicals and related products, and aluminium.

Seasonally adjusted merchandise export volumes rose 0.4 percent in the June 2007 quarter. Over the past year, three out of the four quarters have recorded an increase. The non-food manufactures index and the non-fuel crude index were the main contributors to the rise this quarter. They were almost offset by a fall in the food and beverages index.

The merchandise import price index fell 1.7 percent in the June 2007 quarter, following a 1.8 percent fall in the March 2007 quarter. The main contributions came from falls in the mechanical machinery index (down 5.0 percent) and the transport equipment index (down 3.0 percent). A 3.1 percent rise in the petroleum and petroleum products index provided the main offsetting effect on the overall fall in import prices.

Seasonally adjusted merchandise import volumes rose 3.3 percent in the June 2007 quarter, mainly due to higher volumes of capital goods. However, the consumption goods index fell 4.2 percent this quarter, the first time this index has fallen in the past year. All the consumption goods sub-indexes fell in this quarter, the first time this has occurred since the September 1998 quarter.

As a result of import prices falling more than export prices, the merchandise terms of trade rose 0.6 percent in the June 2007 quarter, following a rise of 1.6 percent in the March 2007 quarter.