A high New Zealand dollar pushed down the price of imports, offsetting a decline in exports which led to New Zealand's terms of trade holding at a 40-year high in the second quarter.
According to Statistics New Zealand, terms of trade, measuring the quantity of imports the country can buy with a set amount of exports, edged up 0.3 per cent in the three months ended June 30, from a gain of 1.8 per cent in the first quarter of this year.
The measure is at its highest level since September 1973. The quarterly gain compares with a forecast 2.3 per cent drop in a Reuters survey.
The terms of trade was largely expected to have peaked in the first quarter, with economists expecting a correction as prices for dairy products, New Zealand's largest export, have tumbled some 40 per cent since the start of the year.
Last week New Zealand posted its first monthly trade deficit for the month of July, meaning more was coming into the country than going out, as the price of logs, the third largest export, dropped some 16 per cent in the year.
"For a change weak import prices, drove the terms of trade improvement, rather than improving export prices that we have seen in previous quarters," said Nathan Penny, economist at ASB Bank.
"However, that record-high is set to live another day as we expect the terms of trade to fall from next quarter. The export price falls this quarter give just a taste of what is to follow."
Export prices overall dropped two per cent in the second quarter, while import prices fell 2.3 per cent.
