New Zealand's terms of trade fell to a three-year low in the September quarter as the country's strong currency ate into returns from an increasing volume of dairy exports.
The terms of trade, which measures how much imports can be bought with a fixed quantity of exports, fell 3.2 percent in the three months ended September 30, according to Statistics New Zealand.
That's more than the 1.8 percent forecast in a Reuters survey of economists.
Export prices sank 6.3 percent, ahead of the 3.6 percent expected, while import prices declined 3.3 percent versus an anticipated two per cent fall.
The falling prices came even as export volumes beat expectations, rising 9.7 percent in the quarter, while import volumes advanced 0.7 percent.
Dairy, which accounts for about a quarter of New Zealand's exports, was the biggest contributor to the falling export prices and rising volumes, with volumes surging 32 percent in the quarter and prices sinking 13 percent.
"Dairy export volumes are at record levels, after adjusting for seasonal effects," said Chris Pike of Statistics NZ.
"Dairy values remain at high levels, even though export prices have fallen for five consecutive quarters."
The New Zealand dollar held back export prices, rising two percent on a trade-weighted basis in the quarter, Statistics NZ said.