Trade Prices Down, Import Volumes Up

Trade Prices Down, Import Volumes Up

The continuing appreciation of the New Zealand dollar has led to further falls in both import and export prices in the December 2003 quarter, according to Statistics New Zealand. A 4.0 percent increase in the volume of imports for the December 2003 quarter resulted in record volumes of merchandise imports for the fifth consecutive quarter.

A rise in the exchange rate of 2.3 percent in the quarter contributed to a 3.2 percent fall in merchandise import prices in the December 2003 quarter. Merchandise export prices, driven down by the exchange rate, fell 0.8 percent, but were partially held up by higher world commodity prices. The larger fall in import prices than export prices means that the merchandise terms of trade for the quarter rose 2.5 percent. An increase in the terms of trade means that more imports can be funded from a fixed quantity of exports.

The record volumes of merchandise imports were driven by higher volumes of capital goods, intermediate goods and consumption goods, while volumes of passenger motor vehicles and motor spirit fell. The latest rise in import volumes continues a series of quarterly increases dating back to the December 2001 quarter.

During the quarter, export volumes rose 2.7 percent, with a 20.9 percent rise in dairy products being the main contributor. The record level of dairy export volumes for the December 2003 quarter are 12.0 percent higher than the previous record, achieved in December 2002.

Higher volumes of both skim and whole milk powder were the principal reason for the increase.

Prices for dairy products fell 3.2 percent this quarter.

In addition to the lower prices for dairy products, export price falls were also recorded for non-food manufactures, down 1.7 percent, driven by falls in the prices of aluminium and casein. Increases in meat prices (up 3.7 percent) and forestry products prices (up 2.5 percent) reduced the overall fall in export prices. This was the first rise in forestry products export prices since the March 2002 quarter.

Falls in mechanical machinery (down 5.5 percent), electrical machinery (down 4.9 percent), petroleum and petroleum products (down 4.5 percent) and transport equipment (down 1.4 percent) were the main contributors to the fall in merchandise import prices in the latest quarter.

The terms of trade for services rose 3.2 percent in the December 2003 quarter due to import prices for services falling (down 3.5 percent) more than export prices (down 0.4 percent). This is the ninth consecutive rise in the terms of trade for services.

Ian Ewing

Acting Government Statistician

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