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ANZ Commodity Price Index - March 2002

Data Flash (New Zealand) ANZ Commodity Price Index - March 2002


The historical correlation between the commodity price index and the broader official export price measure suggests that a fall of around 6.5% qoq will be recorded for average export prices in Q1. That compares to our estimate of a 3.5% qoq decline in import prices over the same period, with the NZD appreciation of around 4% having a significant influence on both figures. This implies a decline in the terms of trade of 3% qoq and 4.4% yoy. Going forward, although we think that world prices for New Zealand's exports are close to bottoming, the recent appreciation of the NZD, combined with our forecast of further appreciation over the year ahead, means that we now look for a slightly deeper dip in NZD denominated export prices than forecast by the RBNZ in its March Monetary Policy Statement.

Key Points

The average foreign currency price of New Zealand's commodity exports fell by 0.7% mom in March. The average price was 8.4% below last year's level. In foreign currency terms, dairy product prices fell by a further 7.9% mom to be 26.8% lower than a year earlier, with a rise in European subsidies on skimmed milkpowder again the key influence. A 4.4% mom rise in the `Meat, Skins and Wool' index and a 2.5%mom rise in the aluminium index provided a partial offset.

Reflecting the appreciation of the NZD during March, the NZD price index fell by a greater 3.7% mom to be 12.0% weaker than a year earlier.

Darren Gibbs, Senior Economist, New Zealand

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