Terms of trade up in December quarter

New Zealand's terms of trade rose an unexpectedly strong 5.7 per cent in the December quarter, as dairy product export prices went up despite a rising currency pushing down export and import prices.

The increase in the terms of trade was the largest since 1976 and followed six consecutive quarterly falls, Statistics New Zealand (SNZ) said today.

The terms of trade index measures the amount of imports a fixed amount of exports will purchase.

"A rising New Zealand dollar in the latest quarter had a downward influence on both export and import prices," SNZ prices manager Chris Pike said.

Import prices fell 5.8 per cent in the quarter, while export prices fell 0.3 per cent. Seasonally adjusted export volumes fell 1.2 per cent from the previous quarter, the first fall since the September 2008 quarter.

The median forecasts of economists polled by Reuters had been for a 2.5 per cent rise in the terms of trade.

They had also expected import prices to fall 1.7 per cent and export prices to gain 2 per cent.

- NZPA