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Higher fuel prices dent terms of trade

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

The terms of trade declined despite overall export prices reaching their highest level in more than nine years, as meat and dairy prices rose in the September 2018 quarter.

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 rise in import prices, up 2.6 percent in the September 2018 quarter, was led by a 6.4 percent increase for petroleum and petroleum products. Diesel and petrol prices were both up 14 percent, while crude oil was up 1.4 percent, after rising 14 percent in the June quarter. While crude oil, diesel, and petrol prices generally move up and down together, there are some periods when prices move independently.

Petroleum and petroleum product prices in the September 2018 quarter were 53 percent higher than the same quarter in 2017. The crude oil price was up 55 percent over the same period.

“Diesel and petrol prices have increased 49 and 47 percent 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 percent) led the increase. Seasonally adjusted dairy volumes fell 2.9 percent and values rose 6.7 percent.

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

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