The FINANCIAL — New Zealand’s terms of trade, a gauge of the country’s purchasing power, fell in the third quarter, as the largest rise in import prices in seven years outstripped an increase in export prices, according to Nasdaq.
The terms-of-trade index for goods fell 3.7% from the second quarter, Statistics New Zealand said on December 1, compared with a 2.4% decline expected in a Wall Street Journal poll.
The drop in New Zealand’s quarterly terms of trade means that 3.7% fewer imported goods could be funded by the country’s exports in the third quarter versus the previous quarter.
Import prices jumped 7.3%, the largest rise since the quarter ending September 2008, with petroleum and related products, and machinery and plant items contributing the most to the rise in total prices. Economists had expected import prices to climb 5.4%.
Export prices rose 3.4%, lifted by a 10% rise in meat product prices. Economists expected export prices to rise 3.0%.
Both import and export prices were affected by a slide in the value of the local currency.
“The New Zealand dollar fell 8.4%–its largest quarterly fall in nearly seven years,” said Chris Pike, prices senior manager at Statistics New Zealand. “This pushed up both import and export prices.”
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