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Export Prices Rise Despite Exchange Rates

Export Prices Rise Despite Exchange Rates

Merchandise export prices increased by 0.2 percent in the March 2005 quarter, Statistics New Zealand said today. Rising world prices for many of our export commodities have more than offset the continued appreciation of the New Zealand dollar against most of our main trading partners' currencies.

The Reserve Bank Trade Weighted Index (TWI) was 1.4 percent higher in the March 2005 quarter. This was the first time the export price index and TWI have moved in the same direction since the September 2002 quarter, when export prices fell 3.8 percent and the TWI depreciated 1.3 percent.

The merchandise terms of trade rose 2.2 percent in the March 2005 quarter. The combined effect of falling import prices and rising export prices was reflected in the rise in the terms of trade index over the latest quarter, and means that more imports can be funded from a fixed quantity of exports.

A 2.1 percent rise in the meat index made the largest contribution to the overall increase in merchandise export prices in the March 2005 quarter. Higher prices for lamb were the major driver of this rise. The index for non-food manufactured goods rose 1.0 percent, mainly due to rising prices for casein and caseinates, while the forestry products index rose 1.6 percent, driven by rising prices for pinus radiata logs.

Seasonally adjusted merchandise export volumes fell 1.9 percent in the March 2005 quarter. The non-food manufactured goods index was the main contributor to the fall, down 6.5 percent. Commodities contributing to the decrease were methanol, sawn pinus radiata, whole milk powder and butter. @ Import prices fell 1.9 percent in the latest quarter, following a 1.6 percent fall in the December 2004 quarter. Falls in prices of petroleum and petroleum products (down 8.6 percent), mechanical machinery (down 3.7 percent), transport equipment (down 1.6 percent), and food and beverages (down 2.1 percent) were the main contributors to the fall in merchandise import prices. A further contributing factor was the strength of the New Zealand dollar against most of our major trading partners' currencies. Partly offsetting the falls were higher prices for textiles, clothing and footwear (up 1.0 percent).

The seasonally adjusted volume of merchandise imports rose 2.9 percent in the March 2005 quarter. Higher volumes of motor spirit and consumption goods were the main contributors to the rise in total import volumes. The total imports index is now at its highest level ever recorded.

Brian Pink
Government Statistician

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