Fuel prices dent terms of trade

Rising petrol and diesel prices pushed import prices up more than export prices, leading to a 0.3 per cent fall in the terms of trade in the September 2018 quarter, according to Stats NZ. 

Terms of trade measures the purchasing power of New Zealand’s exports abroad and is an indicator of the state of the overall economy.

The fall of 0.3 per cent this quarter was due to import prices overtaking export prices. 

The rise in import prices, up 2.6 percent in the September 2018 quarter, was led by a 6.4 per cent increase for petroleum and petroleum products. 

Despite this rise, import movements in the motor vehicle industry brought import prices down, with a 3.1 per cent decrease compared to the previous quarter ending in June 2018.

However, petroleum and petroleum product prices in the September 2018 quarter made up for this and were 53 per cent higher than the same quarter in 2017. The crude oil price was up 55 per cent over the same period.

“Diesel and petrol prices have increased 49 and 47 per cent respectively since the September 2017 quarter,” business prices manager Sarah Johnson said.

“This reflects higher world prices for fuel and a generally falling New Zealand dollar over the same period.”

“The volumes for diesel and petrol both fell in the September quarter, after rising in the June quarter,” Mrs Johnson said.

“This was due to the Marsden Point oil refinery’s maintenance shutdown in the June quarter, when more diesel and petrol were imported to offset refining less crude oil.”

Export prices rose 2.3 percent to reach the highest level since the December 2008 quarter. Dairy prices (up 6.5 per cent) led the increase. 

Meat prices also contributed to the rise in export prices, up 1.9 per cent, to surpass the high of last quarter. Seasonally adjusted meat volumes rose 8.2 per cent, while values were up 13 per cent.