It got harder for New Zealand to earn its living as a trading nation in the June quarter, as the terms of trade continued to decline, with dairy and meat prices falling while oil prices climbed.
The terms of trade measure the changing volume of imports that can be funded by a fixed volume of exports as relative prices change.
They fell 2.6 per cent in the June quarter, and are 6.8 per cent below the 37-year high reached in the June quarter last year.
By historical standards the terms of trade remain favourable, however, around 7 per cent above the average level of the past 10 years.
They have been higher than they are now for only three and a half of the past 55 years.
On the import side the main upward movement in the June quarter was an 8.4 per cent rise in oil and refined petroleum product prices, putting them up 10 per cent on a year earlier.
On the export side, dairy prices fell 2.6 per cent, to be 14 per cent off their peak a year ago.
Fonterra last week cut its forecast payout price by 30c a kilogram of milk solids, which ANZ economists estimate will reduce rural incomes by $450 million.
Meat prices fell 2.3 per cent, driven by lower lamb prices, and are 7 per cent off their peak a year ago.
ASB economist Jane Turner expects further declines in export prices in the next couple of quarters, as it takes time for declines in spot prices to be reflected in the trade data.
Estimates of Russia and Australian grain production have also been lowered.
Aluminium prices rose 2.9 per cent, but are still 14 per cent off their peak in the March quarter last year.
Rio Tinto, the majority owner ofthe Tiwai Pt smelter, is pointingto lower metal prices as groundsfor renegotiating its contractwith Meridian Energy.
Statistics New Zealand's data, based on the smelter's Customs declarations, show its average export price (in New Zealand dollars at the time) over the year ended June 2012 was 8 per cent lower than for the previous year.
That is a smaller decline than after the global financial crisis; the average price over the year to June 2010 was 14 per cent lower than for the year before.